Buyers accustomed to zero down mortgages are in for a big surprise as banks and lenders crack down on lax lending practices. Many companies are determining the required down payment for a Chicago Home For Sale based on zip code.
Banks and lenders are now requiring a higher down payment in neighborhoods that are seeing a drop in values. This means that many some buyers will have to pay 5 percent towards a down payment. However, buyers looking to purchase a home in a neighborhood that has seen a drop in the value of properties will have to pay 10 percent or more.
The list of neighborhoods that are affected by declines in values is updated quarterly by mortgage lenders, and could grow exponentially over the next few quarters.
However, buyers who are able to put 20 percent or more towards a down payment, a practice common with fixed-rate mortgages, will be unaffected by these changes.
Banks and lenders have been hard hit in the past few months by a rapid increase in foreclosures. The number of foreclosures announced around the country continues to reach new highs, causing banks and mortgage lenders to clamp down on subprime loans.
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