What is it with lenders?

Question

Why is it so hard for poverty level people to get a loan on a home on some land even if they managed to save 5,000 to put down on property.

I have seen land with three bedroom modular or mobile home under 100,000. So why do you have to have 20% down, people have to consider moving expenses too. No wonder house sales have gone down there are so many scams out there.

Answer 1

The bottom line is...the bank does not care about the borrower, they care about their investment!  Mobil homes are considered highly risky loans, they have higher rates and require more money down.  They are considered a depreciating assett as well, where regular construction is not.  The bottom line is, if you put 20% down on the home, default in a year and the home is worth less 20% than their risk is limited.  If you put 5% down, default in a year and the home is down 20% they are out big time...thats their bottom line.  Little guy loses out, its tough I am in the same boat!

Answer 2

Savings of 5000. is not much money. That is what should be in your emergency account.   Down payments are a separate account.   To buy a house costing 100,000 you need savings of 30,000.  20k as down payment and the other 10k for closing costs, moving expenses and immediate house repairs, painting and all the extras new home owners need.  

Answer 3

Banks care whether you will be able to pay back the loan. $5,000 is peanuts.  A 20% or more downpayment gives a borrower some "skin" in the game and lessens the bank's exposure.

A house is not a right and a bank is a business not a charity.

Answer 4

ok some people on this site want to put themselves above the rest of us.  how can you say 5,000 dollars is peanuts. some of us come from family that does not hand out money like water. we did not get a credit card at 16 or a new car on our 16th birthday. we received a job app. do not judge unless you have been in our shoes.i've been there, government cheese was really good growing up. we as a poverty leveled group are trying to live the american dream just like those who have a little more than us starting out.all we need is for some lender to see we are determined and give us a chance. ok enough about that. good for you. you have 5,000 keep it up you are in the right track, when you have your keys to your home. stand up and say this is for the little guy.  oh yeah.

Answer 5

Mainly because people like you could not afford the mortgage they got themselves into.  That's why we are in the mess we are in. 5% down on a 100K house ya right.....that ain't gonna happen again.......