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Twenty Percent Down Payment Not Easy For Consumers

As consumer advocates and mortgage lenders take to the streets fighting the implementation on the Qualified Residential Mortgage Rule (QRM). Potential home buyers were polled to see what they think about coming up with 20 percent for a home purchase.

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The ""National Foundation for Credit Counseling"":http://www.nfcc.org/ (NFCC) shows no improvement on the ability for potential homeowners to raise 20 percent for a down payment from 2010 to 2011.

The ""NFCC"":http://www.nfcc.org/ online poll has concluded that close to half of the respondents would never be able to save enough money for a down payment on a home despite the low state of the current U.S. housing market. On the other end of the spectrum and identical to 2010, the 2011 category with the lowest response rate, 12 percent, represented those who indicated they would have no trouble coming up with a 20 percent down payment.

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""The 2011 results could be even worse than they appear at first glance,"" said Gail Cunningham, spokesperson for the NFCC. ""Since prices for homes are at historic lows, the necessary down payment represents a lower dollar amount than would typically be necessary. Nonetheless, consumers still do not feel capable of meeting the requirements.""

The numbers suggest that consumers are reconciled to satisfying their housing needs through renting, even though in some markets it can be more affordable to buy a home than rent. While demand for rentals increased, so did the cost of renting. Although renting has many advantages, it may not stimulate the economy as much as an uptick in the housing market world, as renters do not typically spend as much on home improvements, lawn equipment, appliances, or other areas which would lead to job growth.

Consumers' inability to buy a home exacerbates the already distressed housing market and slows recovery. Neighborhoods with multiple homes for sale or in foreclosure create blight on the entire area, resulting in a decreased tax base for the community, and further distress experienced by the displaced families that have been forced to abandon their dream. The longer the neighborhoods go unoccupied, the more prone to crime and vandalism they become, diminishing the property values even further.

""Now is the time for consumers to examine their long-term goals as they relate to housing, and take the steps necessary to meet them,"" said Cunningham. ""Renting may be the right answer for some people, but just because home ownership isn't on the horizon at the moment doesn't mean it never can be.""

About Author: Abby Gregory

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