Question

In addition to the need for a hefty down payment, buying a home prior to WWII was challenging because _____________.

1) There were an insufficient number of homes available.
2) Instead of 15-30 years to repay the loan, borrowers had only five years.
3) Mortgage interest rates were very high.
4) Banks had insufficient reserves to make mortgage loans.

Answer 1

Prior to WWII, the challenge in buying a home was that borrowers had only five years to repay the loan, making home ownership less accessible. Changes post-WWII, including the G.I. Bill, introduced longer-term mortgages and more favorable lending practices, greatly increasing American home ownership.

Step-by-step explanation:

In addition to the need for a hefty down payment, buying a home prior to WWII was challenging because borrowers had only five years to repay the loan instead of the 15-30 years that became common afterward. Before the G.I. Bill and subsequent changes in banking and lending practices, home loans were often short-term with a requirement for a balloon payment at the end, making it difficult for average Americans to afford purchasing a home.

After WWII, with initiatives like the G.I. Bill, there were significant changes that spurred home ownership in the United States, including the elimination of down payment requirements for veterans, the introduction of long-term mortgages, and regulatory changes that made it cheaper and easier for banks to offer home loans.