Every month there are new loan programs. Mortgage banks and large construction companies optimistic talk about the development of credit programs for housing purchase. In the United States up to 90% of housing is purchased with loans. Many international experts believe the real estate market, that it is the American model of mortgage lending is ideal for most conditions.
What, then, the main characteristics of this market? What is he so good?
Banks often make concessions to borrowers: not required surety bonds, certificates, initial contribution. There is growing credit programs for engaging in a mortgage greater number of citizens. Materials of banks and publications in the press convincingly painted pluses, legal clarity and benefits of mortgage transactions. In civilized America, virtually all home buyers used a mortgage, despite the fact that in other countries people do not realize all the benefits of living in debt.
Mortgage for the long term
The most popular in the U.S. view of housing loans – mortgages for 30 years (maximum). In second place – loans for 15 years. Much less demand for loans for five years and short-term – for a year.
“The U.S. interest rate may be fixed and floating (for example, with reference to a rate of LIBOR), – said Managing Partner at Blackwood Kane Kovin. – Interest is quite flexible and depend on the terms and conditions of lending. In addition, they are quite sensitive to changes in base rates. Raising the discount rate the Federal Reserve System in 2006 led to more expensive mortgages, and that was one reason for destabilization of the American real estate market.
Currently mortgages in America to issue an average of 6% per annum. The stakes in banks are fixed or floating. Then easily refinance the loan and pay interest on more favorable terms. If the client is bankrupt and unable to return the debt, the house becomes the property of the bank. Seven years after the bankruptcy of the credit history of man begins with a clean slate, and all this time, the credit bureau watching him.
All sold on credit
At the primary real estate market, housing is sold already prepared. Therefore, in terms of primary and secondary mortgage markets in developed countries, including America, have no such fundamental differences: in any case is the subject of a pledge, which is a basic condition of the mortgage.
American construction companies do not offer to invest in real estate under construction and thus save money. This could be a very attractive option, but would reduce the total number of mortgage loans. The logic is this: is better in any way to get money to pay and wait for the delivery of houses in operation, than to take a mortgage and settle down at once, but significantly (sometimes up to 100% of cost) to overpay for a house or apartment.
“The Class” preferences of creditors are also not in the U.S. is clearly marked. Given that almost all housing sold on credit, valid only talk about specialization of some mortgage institutions in economy, business class or elite housing. Here differentiated demand: it is obvious that the demand for mortgages higher than the buyers of objects of economy and business class.
Many U.S. banks issue loans with no down payment. The decision depends on the borrower’s credit history. In addition, banks require proof of financial solvency of the client. Has a potential value of the place of residence of the borrower (resident or non resident of the U.S.), age, occupation, marital and financial status.
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