Traditionally, banks loved first time buyers because they would bring their money to a bank and leave it there for a long time. Because first time buyers are often a bit more unstable financially, they are now seen as less important to banks. You may be wondering how exactly first time buyers are being affected by the credit crunch.
The answer to this question is complex. The first thing you have to look at is what first time buyers got before. Usually, they were able to get a mortgage with a really good interest rate or a mortgage without needing to put a lot down for a down payment. The problem is that a lot of first time buyers who only put down five or ten percent of the price of the home ended up not being able to afford their homes when the economy turned bad. This ended up causing a huge headache for banks, and a lot of banks are reconsidering their first time buyer strategies.
You may be asking what is going to happen with your current first time buyer mortgage. If you have already signed the deal and have a low interest rate or other special, you don't have to worry about a thing. Those who are now looking for a first time buyer deal are probably going to be affected by the problems with the economy. Current mortgage seekers can expect to need a higher down payment, and if they do get approved for a low-down payment on their house, they are going to need to carry insurance to protect the bank. This is going to increase the amount of fees that they pay every month, making this deal not so good of an option.
Also, you can probably expect to see fewer first time buyer deals offered by banks. Add to that the fact that mortgages are going to get more and more expensive because banks are going to be more careful with their money because of the bad economy. In the past almost anyone could get a mortgage, but in the future, you are going to need to be financially secure and do a lot more in order to secure a mortgage. This can be an advantage if you are someone who has good credit, because you are going to have to pay less for those who ruin the system by foreclosing on their homes. When someone defaults on their mortgage, a little bit of that mortgage is passed onto everyone else in the form of higher interest and fees. If your credit score is not so hot, you might not be so happy to hear about these changes.
Those who are looking for their first house are going to find getting a mortgage now is more difficult due to the bad economy. There is really nothing that you can do now, so if you already have your mortgage, consider yourself among the fortunate.
The answer to this question is complex. The first thing you have to look at is what first time buyers got before. Usually, they were able to get a mortgage with a really good interest rate or a mortgage without needing to put a lot down for a down payment. The problem is that a lot of first time buyers who only put down five or ten percent of the price of the home ended up not being able to afford their homes when the economy turned bad. This ended up causing a huge headache for banks, and a lot of banks are reconsidering their first time buyer strategies.
You may be asking what is going to happen with your current first time buyer mortgage. If you have already signed the deal and have a low interest rate or other special, you don't have to worry about a thing. Those who are now looking for a first time buyer deal are probably going to be affected by the problems with the economy. Current mortgage seekers can expect to need a higher down payment, and if they do get approved for a low-down payment on their house, they are going to need to carry insurance to protect the bank. This is going to increase the amount of fees that they pay every month, making this deal not so good of an option.
Also, you can probably expect to see fewer first time buyer deals offered by banks. Add to that the fact that mortgages are going to get more and more expensive because banks are going to be more careful with their money because of the bad economy. In the past almost anyone could get a mortgage, but in the future, you are going to need to be financially secure and do a lot more in order to secure a mortgage. This can be an advantage if you are someone who has good credit, because you are going to have to pay less for those who ruin the system by foreclosing on their homes. When someone defaults on their mortgage, a little bit of that mortgage is passed onto everyone else in the form of higher interest and fees. If your credit score is not so hot, you might not be so happy to hear about these changes.
Those who are looking for their first house are going to find getting a mortgage now is more difficult due to the bad economy. There is really nothing that you can do now, so if you already have your mortgage, consider yourself among the fortunate.
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