Question Details

Robbie, Home Buyer in Rockland County, NY

When an area is a declining market, does that mean you pay more money for a down payment and closing costs?

Asked by Robbie, Rockland County, NY Mon Mar 3, 2008

Help the community by answering this question:


We are being asked to pay 8% down payment by Navy Federal Credit Union (3% over what they advertised for new home buyer) because the house we want to purchase is considered in a "Declining Market Area". I thought as of June 1, 2008, the banks could not require a larger down payment because the area was considered a "declining market value". New National Down Payment reqirements 3-5%. Can I contest the Credit Union's policy or should I just shop around for another bank?
0 votes Thank Flag Link Thu Jul 31, 2008

Everybody's answer to your question is their perspective relative to their profession. Yes, you will have to come up with more money for a down payment if your home is listed in a 'declining market area". As for closing you won't have to pay more closing costs.
0 votes Thank Flag Link Wed Jun 11, 2008
On May 16, 2008 Fannie Mae Announced Single National Down Payment Policy that
Replaces Policy Regarding Markets Where Home Prices are Declining. The new national down payment requirements of 3 or 5 percent will apply to loans for purchase of single-family, primary residences.
0 votes Thank Flag Link Wed Jun 11, 2008
Bank of America is offering to pay many closing costs, and with only 5% down, no PMI. I just settled today, and they paid 2500 of my closing costs...Awesome! No pmi saved me 130 per month as well.
0 votes Thank Flag Link Mon Mar 3, 2008
Hi Robbie -

I agree with Larry regarding the definition of a declining market. However, here in Michigan it's been a declining market for the past several years. Many lenders have declared this a declining market and will not approve 100% financing. The major lenders in the area are requiring at least 5% down with a conventional mortgage and 3% with the FHA financing. With the uprise of foreclosures, lenders want to see some commitment into the home from a buyer. If they have some money invested, they might not be so willing to "walk away" from the property.

Nicole Sleeva
Web Reference:
0 votes Thank Flag Link Mon Mar 3, 2008
A declining market is related more to the market value of homes. For example in the areas the national media likes to focus on like some areas of the west coast and Florida there was a "bubble" where the prices of homes went above the real market value of those homes. There is also the condition where some adverse condition has come up in the community. A rezoned area for industrial or even something that has created a negative affect on the market driving prices down. So a declining market in real estate has nothing really to do with down payments and closing costs. Those are financing issues.

If you have anymore questions feel free to drop me a line.

Larry Story
Coldwell Banker
0 votes Thank Flag Link Mon Mar 3, 2008
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