Banks are Lending Money!

Banks are lending money to creditworthy buyers. They are also only requiring 5% down for a conventional loan and 3.5% down for an FHA loan. The news media is either giving buyers the impression or actually telling the public that banks are not lending or that they are requiring 20% down. This is just not true. What is true is that they have tightened their lending practices that were once out of control. They have also eliminated the 80/20 loan that was designed to cover the private mortgage insurance. Now, in order to avoid paying this monthly insurance, you need to put down 20%. This is where the confusion may lie.

Before the downturn, a buyer could purchase a house without even having a job, as long as they had good credit! That is not the case anymore. Those days are gone. Banks are now scrutinizing each and every loan to make sure they don’t make a mistake by taking on a buyer who cannot pay. You may have to provide more paperwork than ever before to the lender but they are still lending!