If you are attempting to buy a home in the current real estate market, to say that finding sufficient lending would be an understatement, given all the restrictions and limitations bank have started to implement. Frequently, having a high credit score and a stable job is not enough to get approved to buy a home, for reasons unknown to many buyers. We can trace all of these problems back to banks and their hesitancy to loan based on current market conditions.
The Reasoning
By waiting unti there is more stability in the market, banks can make safe loans with lower interest rates? By temporarily limiting or not loaning to people who have slightly less credit, the banks can optimize their own performance by borrowing for little or nothing, and getting a return of over 5 percent per year from the lowest credit risks out there. To bolster confidence in our banking system the banks can borrow money for next to nothing, while collecting at least five percent per year return, and report record profits all the while, like they are financially brilliant.
Doing their homework and realizing that there will be over 88 million new home buyers hitting the housing market, as reported by the census bureau, banks will be buoyed by the first time home buyers and new investors seeking to retire some day. The banking industry lobbyists in Washington D.C. have been working overtime to get any and all legislation passed that will allow the banks to do whatever they want in the real estate industry.
The Solution To Our Banking Problem
Home owners were originally the lenders, before the era of the big banks and banking corporations. 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. Acquiring your real estate in this way is the smartest way to buy your property today.
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. When you total up all the added fees and the interest payment banks will collect, and the insurance that you have to buy for them to make the loan, it really seems like you are the one risking instead of them.
The most successful game plan is still to save up about twenty percent of your home costs, and buy the land on an owner carry note after that. Owning the land yourself will always make building your home much easier and financable. 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.
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