The news media today has little concern about spreading misinformation if it means selling more newspapers or attracting more viewers. And their stories of doom and gloom rank right up there with fear, for attracting a larger audience.
But as promised in my last letter, I’m taking it upon myself to broadcast the truth about mortgage lending today and the financing options now available to buyers right here in our local real estate market.
First, though, here’s a quick recap of happenings in our nation’s mortgage and real estate industries over recent years that affect the housing market today:
- As lenders relaxed their requirements for home loans, new previously unqualified buyers (known as “subprime borrowers”) flooded the marketplace using low-interest adjustable rate mortgages (ARMs) to buy homes they really could not afford. As this huge demand for homes overtook supply, home prices were driven up, creating a boom market unprecedented in U.S. real estate history.
- In a few years when the first of these ARMs reset to their higher interest rates, the borrowers could not afford the higher monthly payments and fell behind on their mortgages. This led to historically high numbers of foreclosures. Now, with foreclosed homes flooding the marketplace, the supply of homes for sale has overtaken demand and driven home prices down. This is good news for buyers.
- The flood of foreclosures played havoc with institutional investors that had invested billions in complex investment products created by the repackaging of these subprime loans now in default. As a result, the very foundations of the investment banking industry were shaken, and Wall Street giants such as Lehman Brothers went under, sending shock waves throughout the economy.
Responsibility for this mortgage, real estate and investment-banking crisis is widespread. But what matters today is that the journey to recovery has begun. With recovery comes a return to the realistic home-loan qualifications in place before the boom market began. And ...
If you’ve wondered how this return to responsible lending and stricter borrowing standards affects buyers ready to secure financing to purchase a home, here’s how ...
- Buyers who cannot verify their income and assets will need to postpone buying a home until they can meet this requirement.
- Buyers whose credit score prevents them from borrowing as much as they’d like or from getting the lowest interest rate available may need to pay down outstanding debts to improve their credit score and qualify for a larger mortgage or a lower interest rate. For buyers needing to raise their score, I have access to people and information that can help.
If you’re ready to buy and qualify now, I have exciting news for you...
Some of my current listings under $400,000 have 100% financing available for qualified buyers. Others have low down payment loans ... and some sellers offer generous closing-cost help. FHA loans with 3.5% minimum down payments have generous debt-to-income limits and allow up to 6% closing-cost help. Plus, USDA loans offer 100% financing for buyers in specific areas with low-to-moderate income and decent credit.
So, whether you buy now or later, I help you find the home you love with financing at a monthly payment you can afford.
To discuss homes available with great financing, call me direct at 858-342-9292.
Let's get your home purchase moving.