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Housing : Placing Bigger Bets By Placing Less Down

Many homebuyers are being more creative, taking more risks in getting into the housing market. According to SMR Research 38.1% of home buyers put less than 5% of the purchase price down, up from 30.6% in 2000. [USA Today] [1] Piggy back financing, obtaining a line of credit simultaneously with the house purchase to put 20% down to avoid PMI insurance, has also been rising. SMR says 48.2% of buyers used piggy backs up from 19.9% in 2001.

Americans now shoulder record levels of housing debt — more than 8 percent of homeowners spend at least half their income on their mortgage. [Washington Post] [2]

So What?

Well, as more people increase their borrowing risk, foreclosure rates rise.

Foreclosure.com published a list, by state, of foreclosure inventory available for sale in August. [Valuation Review: Pd. Sub.] [3] There was a 3% increase from 90,611 units in 93,440.

Sample media foreclosure coverage from around the country:

Texas Up 6.6% from July to August 2005 [San Antonio Bus Journal] [4]

Massachusetts Up 29% from August to August 2004 [RISMedia] [5]

Georgia Up 4.4% from June to July 2005 [Realtor.org] [6]

See previous post: PMI Gets You In The House: Now Get Rid Of It [7]