Wednesday, March 07, 2007
Regulators caution subprime lenders - Does this affect you?
So recently an article by the Associated Press entitled "Regulators call for caution on subprime loans" which can be found at http://www.msnbc.msn.com/id/17428186/. So exactly what does this mean for all of us home owners and what does this mean for buyers who are trying to purchase. I will give an opinion on it and would love to hear yours.
What does this mean in general?
What this means is the federal government is concerned about the lending practices that have taken place the last several years on loans that are subprime. So what is subprime? This definition varies by lender but in general this means an individual who has a credit score below 640 and who is choosing a loan product that they are stating, without proof, their assests and their income.
So individuals who cannot prove their income and may have credit troubles will now have greater difficulty in getting a loan if they are not putting 5% or 10% of the purhcase price down. This is not necessarily a bad thing. Many of our parents used to have to save 20%. Now before everyone writes how prices were cheaper back then please also note that wages were lower as well. Let's not take away from our parents and grandparents diligence.
What does this mean to home owners?
This means that your agent better review the kind of buyer you are getting offers from. It should mean checking out credit scores and hopefully getting a buyer who is putting 5% or more down on the purchase of the property. It also means that sellers may have to lower the price of their homes so that it is open to more buyers.
What does this mean for buyers?
This means that buyers will want to make sure that the lender who is saying they can get approval for a certain amount they can deliver. It also means possibly buying a smaller less expensive property and having to wait a little to trade up.
My opinion is there will be less loans issued out that don't require documentation. Those who are putting money down, those using first time home buyer products, those who are putting money down don't have much to worry about. If you were going to by my not telling the truth on what you make and your buying a home that you hope goes up 30% in one year then I am sorry to say that probably won't work for you.
As usual, you decide the truth!
You be the judge of the real estate market!
What does this mean in general?
What this means is the federal government is concerned about the lending practices that have taken place the last several years on loans that are subprime. So what is subprime? This definition varies by lender but in general this means an individual who has a credit score below 640 and who is choosing a loan product that they are stating, without proof, their assests and their income.
So individuals who cannot prove their income and may have credit troubles will now have greater difficulty in getting a loan if they are not putting 5% or 10% of the purhcase price down. This is not necessarily a bad thing. Many of our parents used to have to save 20%. Now before everyone writes how prices were cheaper back then please also note that wages were lower as well. Let's not take away from our parents and grandparents diligence.
What does this mean to home owners?
This means that your agent better review the kind of buyer you are getting offers from. It should mean checking out credit scores and hopefully getting a buyer who is putting 5% or more down on the purchase of the property. It also means that sellers may have to lower the price of their homes so that it is open to more buyers.
What does this mean for buyers?
This means that buyers will want to make sure that the lender who is saying they can get approval for a certain amount they can deliver. It also means possibly buying a smaller less expensive property and having to wait a little to trade up.
My opinion is there will be less loans issued out that don't require documentation. Those who are putting money down, those using first time home buyer products, those who are putting money down don't have much to worry about. If you were going to by my not telling the truth on what you make and your buying a home that you hope goes up 30% in one year then I am sorry to say that probably won't work for you.
As usual, you decide the truth!
You be the judge of the real estate market!
Labels: House market, house values, lending, loan rates, loans, Real Estate Fall, real estate market, real estate prices, sub prime, values of homes
Saturday, March 03, 2007
Rates at 6.18% - still a good time to buy?
You know I like it when I see a nice article that gets no press because it doesn't have a crazy enough headline for the main stream media. The article is entitled "30-year mortgage rates drop to 6.18%" by the great people at the associated press. The full article can be found at http://www.msnbc.msn.com/id/7148582/.
So you are saying, boring, so what, don't care. Well we all should care. This is still one of the greatest times in history to buy. While all the pundits say the market is bad, don't buy, watch values fall, blah, blah, blah. Ask anyone who bought a home in 1981 or 1982 what they think of rates at 6%. Trust me they will have some great stories and we would all be wise to listen to them.
Check out the graph above for an illustration of what I am talking about. Look at the history. Rates for real estate have traditionally been over 7%. Those who bought in the early 80's at 13,14, or 18% would love to have 6% when they bought their first home.
So what's the point of all this. Still a great time to buy for buyers. The sellers also have a great time to attract buyers who can get low interest rates and afford their homes.
As usual, you decide the truth!
You be the judge of the real estate market!
Labels: buyers market, buying a home, first home, home prices, loans, mortgage rates, rates, values of homes
