Many times I get asked do $0 down programs still exist. I get two responses Â from my answer every single time. More commonly is a happy amazement. Then the other side is anger and disbelief. The real estate seekers that are happy commonly are 1st time buyers who can get $0 down programs from USDA to VA, and they can also get government assistance up to $15,000. I would be very excited as a real estate buyer in Casa Grande Arizona or anywhere for the fact.
Now for the people who are angry they blame the innocent $0 down programs for the foreclosure mess we are in. However, for years and years we have had $0 down programs and not this mess, so we can assume the $0 down buyers did not create this mess we are in. The people who created live in and sleep in Washington. This would be our congress, senate, and the President. They created what is called mortgage deregulation, which allow high risk loans to be berried within a safe financials. Yes, right next to the super save securities, stocks, bods, that were very stable.
The other part was tax related we made buying real estate a very profitable transaction. You could buy a sale a home every 2 years without any tax penalties. Yes, tax free on all of your equity or profits. Then add in George W if you love him or hate him he created the shelter to protect the home owner walking away from their home, which could had stayed. The financial losses the banks would normally take would be seen as income buy the home owner, so they would have to pay taxes on it, but not under Bush and not so far under Obama. You could walk away from a million dollars and pay not a single sent on the losses.Â
The real estate issues could be resolved with a matrix of solutions:
if you walk you pay the taxes on the income transferred over to you
if you walk and can afford your home you still owe the entire balance and you cannot do a bk to remove it
the banks lender with $0 down options based on 20 year market averages. If the value of a home depreciates +4% above the 20 year average then each percent above that the purchaser brings in to help slow the appreciation down.
when the market starts to appreciate above 4% of the 20 year average then interest rates start to increase too.
These four solutions will help stabilize the real estate market. If we implemented them today how many people would be walking from their homes, and how quick would we start the recovery process.Â
If you are upside down right now try for a loan modification, and banks be wise and give them, but make them pay off their mortgage over 15 years too.