Dealing with a 20% Down Payment

Home buyers may now need to pull out their calculators when tackling a common dilemma: what to do if they don't have enough money for a 20% down payment.   In recent years, piggyback loans, low-cost and easy to get, have been the product of choice for many cash-strapped consumers eager to purchase homes. But with short-term interest rates now sharply higher — currently above 8% — piggyback loans are less appealing. Now, there are signs that some borrowers are giving traditional private mortgage insurance a second look.

New federal tax legislation expected to be signed by President Bush today gives some consumers even more reason to turn to mortgage insurance. The new law makes the insurance premiums tax deductible for some borrowers who take out new mortgage-insurance contracts in 2007. That is in addition to the tax deduction homeowners can already take on the mortgage interest they pay.  

Find out what to do if you can't make a 20% down payment on a home…

Existing Home Sales Falling in 2007

According to the National Association of Realtors, next year will likely bring a second annual decline in existing home sales.

Sales of existing homes are expected to decline 8.6 percent to 6.47 million for 2006 and contract another 1 percent to 6.40 million units next year. Still, the housing sector should see a rebound by the end of next year, said David Lereah, the association's chief economist.

"By the fourth quarter of 2007, existing-home sales will be 4.6 percent higher than the current quarter," Lereah said.   Sales of new homes should fall a sharp 17.7 percent this year and another 9.4 percent next year, the Realtors said.

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