Many real estate buyers have experienced great difficulty in completing their home purchase over the last few years, due to a lender side issue other than the normal credit and job confirmation issues. 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.

The Reasoning

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. They are taking taxpayer dollars for free, turning around and loaning them for 4-5 points per year back to the same taxpayers they initially got the money from.

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. The banking industry lobbyists in Washington D.C. have been working overtime to get any and all legislation passed that will allow the banks to do whatever they want in the real estate industry.

The Solution To Our Banking Problem

Home owners were originally the lenders, before the era of the big banks and banking corporations. That is right, the home owner simply allowed the buyer to pay them off over time, interest accruing of course, until the debt was paid in full. Acquiring your real estate in this way is the smartest way to buy your property today.

Let us just say you have to purchase a lot and save up the rest of the money to build it, you are way ahead of the game than if you would have borrowed through a bank. With all of the fees and interest banks charge you, plus the insurance that covers their butts that they make you pay for, you are really the one taking the risk, not them.

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. Reinforcing a mentality of frugality will make your money go further than you though, and will keep you from being tied up in possessions that can limit your financial freedom.

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