The Down Payment Returns?

I guess we should cheer that fiscal responsibility and sanity is making a return in the form of a down payment. Funny, but I never thought that it left. Then again, I put 20% down on my house, and bought a house accordingly. I didn't go outside my means, and followed the most conservative estimates of what I could afford.

The problem is that too many buyers and too many lenders thought that the down payment was an anachronism. They started providing no money down or low down payment mortgage packages, which were fine when market values increased at a 10-15% clip, but when the market slowed (as it inevitably does) and prices began retreating, those who had no money down or low down payments found their loans upside down - owing more on the house than their equity indicated.

It's nice, however, to see that sanity is returning to the lending market. Buyers have to be aware that they can't buy homes for no money down or else they will pay insanely high interest rates or adjustable rate mortgages that will ratchet up significantly at the end of the teaser period. Saving up for a down payment teaches fiscal responsibility, which is something many people simply lack.