The government wants to get more buyers into the housing market – it made that evident last week with a statement from Fannie Mae that basically told the public we’re going to ease credit guidelines and lower down-payment requirements.
Private Mortgage Insurance Still Required
Even with the new low down-payment mortgage options, any loan with a lower than 20% down-payment will still require the borrower to carry private mortgage insurance – that is not changing.
Higher Mortgage Defaults Ahead?
Some housing analysts believe the changes to the program may result in higher defaults. Sure, this is true, but you can expect to have higher rates of default when more people are borrowing. I don’t see this as a negative and actually a necessary evil to spur the housing market.
The push for low-down-payment loans will no doubt intensify the debate over how far to go in making mortgage credit more available.
For more information check out a detailed article on the New York Times.