Many real estate buyers have experienced great difficulty in completing their home purchase over the last few years, due to a lender side issue other than the normal credit and job confirmation issues.
Many times the buyer has been an A+ credit risk and has had a job for several jobs, but has a problem getting the loan to close with the banks.
We can trace all of these problems back to banks and their hesitancy to loan based on current market conditions.
Their Logic Why would you loan out a trillion dollars when you could create a log jam and loan out ten trillion? The idea here is this, the banks are making borrowing money difficult because they have essentially free money from the government with rates for banks at.
5%, then they turn around and loan it at "historic lows" for about a 4-5% per year pure profit.
They are taking taxpayer dollars for free, turning around and loaning them for 4-5 points per year back to the same taxpayers they initially got the money from.
Why would you loan out a bunch of different loans when census numbers say that 88 million young people will be getting into to the housing market over the next few years, and many will want home loans.
Just make the buyers of today wait a while and you can make your lending environment, regarding laws that apply to the lending industry, more friendly to your industry.
Our Solution Banks were not initially the lenders in real estate, owners were.
When a buyer did not have the cash to pay off a house, the seller simply held the deed and charged and collected interest until the note was paid in full.
This is how Americans should buy real estate now.
Even if you have to purchase a building lot and wait a few years to build on it, you are in a far better off situation financially than if you involve a bank.
With all of the fees and interest banks charge you, plus the insurance that covers their butts that they make you pay for, you are really the one taking the risk, not them.
The simple solution is for Americans to be patient and not purchase a home until they have at least 20% saved up, then buy land.
Buying land, on either a seller note, or your own cash, will make financing your home much easier.
Getting back to a frugal mindset that values cash more than materialistic possessions will help you appreciate your money a lot more, and help you grow it more than anything.