If you are attempting to buy a home in the current real estate market, to say that finding sufficient lending would be an understatement, given all the restrictions and limitations bank have started to implement. Having a reliable job and a great credit score used to be all it took to have the banks throw money at you, but now there is some unexplainable hesitancy on their part. In an attempt to avoid facing any more defaults or at least minimize them, the banks have understandably back off of granting as many loans as they were.

Their Logic

Loaning money in a slow market is not as easy as loaning it in a busy market, so wait until it is busier to loan? The idea here is this, the banks are making borrowing money difficult because they have essentially free money from the government with rates for banks at.5%, then they turn around and loan it at "historic lows" for about a 4-5% per year pure profit. To bolster confidence in our banking system the banks can borrow money for next to nothing, while collecting at least five percent per year return, and report record profits all the while, like they are financially brilliant.

Doing their homework and realizing that there will be over 88 million new home buyers hitting the housing market, as reported by the census bureau, banks will be buoyed by the first time home buyers and new investors seeking to retire some day. By putting today's buyers off for a short spell, they will fabricate the legal changes with their lobbies and be able to run the real estate market from top to bottom.

The Best Way To Resolve This

Banks were not initially the lenders in real estate, owners were. When a buyer did not have the cash to pay off a house, the seller simply held the deed and charged and collected interest until the note was paid in full. Buying real estate in this fashion would be the best way to approach today's market.

If you buy the lot on an owner carry purchase and then put your cash into the building on the lot, you can always pay on the owner carry note, and still be far ahead of doing it all through a bank. Taking the time to calculate the interest payments and fees banks charge, then adding on the monthly mortgage insurance that you will be paying for them, you have more risk in getting this loan than the banks do in loaning it.

The simple solution is for Americans to be patient and not purchase a home until they have at least 20% saved up, then buy land. Whether you use an owner carry note or can cash out on your land, you have more freedom to lead the construction of your home from there. Focusing on being conservative with your credit and avoiding materialistic traps, your home construction can be the best way to build wealth and independence.