Jim DonovanPHILADELPHIA (CBS 3) ― Struggling homeowners aren't getting the help they need! That's according to a new report which finds 70 percent of delinquent sub-prime borrowers are still in trouble. About 300,000 homeowners are in some stage of foreclosure, that's up 8 percent since October.
The mortgage mess is affecting home buyers too! Even though house prices have been falling, banks just aren't giving money away like they used to, especially to first time borrowers. Long-time renter Renee Forzano had her heart set on buying a condo, but she now realizes that all the fees and financing means that dream needs to be placed on hold. "After talking to the mortgage broker it was going to be almost double what i pay in rent to actually own it," says Forzano.
Dropping prices are motivating many first time home buyers, ready to capitalize on cost savings. But stricter lending standards are leaving some to rethink whether the time is right. According to Stacey Bradford of Smart Money Magazine.
"We're seeing a lot of people are finding that you need to put down a much larger down payment and have a very strong credit score."
Many buyers now have to shell out a down payment of 10 to 20 percent, when in the past there were five-percent or even no-money down loans available.
"20 percent is ideal. Anything less than that you have to start paying pmi, or private mortgage insurance, and that's actually a fee you are going to have to pay in addition to your interest rate on your mortgage," says Bradford.
So what should be the deciding factor for first time buyers on the fence about purchasing a home? You need to seriously consider how long you'll be living in that home. Experts say it needs to be a minimum 3 to 5 years or even longer to ride out this crisis in the housing and mortgage industry.
(© MMVIII, CBS Broadcasting Inc. All Rights Reserved.)
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