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Derek Egeberg - NMLS#180899 Branch Manager, Loan Officer Guild Mortgage (NMLS 3274) Phone: (928) 247-9089 License: BK 0915245 derek.egeberg@guildmortgage.net www.guildyuma.com |
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June 2009
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Can You Get a Loan Today? Changes in the real estate and mortgage markets have prompted many, including many in the media, to wonder, "Can you get a loan today?" For an answer to this important question, YOU Magazine turned to Barry Habib, an expert in the mortgage-backed securities market. Chairman of Mortgage Success Source and founder of Mortgage Market Guide, Mr. Habib has managed a hedge fund, authored a stock advisory newsletter, owned an insurance agency, and has been an avid real estate investor for many years. Habib says that, yes, you can get a mortgage in today's market, but you have to understand that lenders have returned to a pre-2000 mindset – a kind of "common-sense lending" that seeks long-term success versus short-term profits. There's plenty of money available, says Habib, but your mortgage must make sense in today's terms, not the looser standards permitted by lenders in 2000 and 2001. How Did We Get Here? In retrospect, it's easy to see, and even understand, the mistakes that were made during this unusual period of growth. Rapidly escalating home prices not only eased economic and personal financial woes, they invited opportunity and risk whose rewards, while hard to resist, couldn't possibly be sustained at such a high level. Nonetheless, increasing equity created flexibility that benefitted buyers and sellers alike – as long as property values continued to ascend. During this time, borrowers with no jobs, no down payments, and poor credit histories could easily obtain financing. A host of exotic mortgage products flooded the market. And even if a borrower got into trouble, there was a multitude of options to help him or her climb out of the hole, including refinancing or even selling the property. A lot of people made a lot of money during this time. But, as the real estate market began to turn and the economy began to suffer, home values slowed and then ground to a halt, and the true risk in the market was exposed. No longer supported by skyrocketing home values, borrowers had fewer options, lending guidelines tightened, adjustable rates adjusted, resulting in a crash in the market that is only now just beginning to turn. What Does This Mean to Borrowers Today? Ability to Pay Willingness to Pay Equity in the Transaction If someone is strapped for cash, however, it is still possible in the purchase contract to negotiate with the seller to pay a percentage of the closing costs, as long as it's within the program's limitations and the property appraises highly enough for this action to be permitted. With the exception of the President's Home Stability Plan, it is no longer possible to refinance a loan without equity in the property. However, under this plan, millions of homeowners are expected to be able to take advantage of being able to refinance at a loan-to-value of up to 105% of the appraised value. Cash-out refinancing has also been tightened, compared to just a few years ago. While pulling equity out of a home is still possible, the costs to do so have become more expensive for homes with a higher loan-to-value. Depending on the program, cash-out transactions have generally been limited to a maximum of 85% of the home's appraised value. The Property For those loans impacted by HVCC, all parties involved should be prepared for potential delays. If value conflicts occur, sellers, buyers, homeowners, and real estate agents must be prepared to provide information where needed. In locations of the country where property values have been in significant decline, additional documentation may be required by the appraiser to help the lender justify the appraised value. In Summary Reports suggest that over $2.7 trillion in loans will be originated in 2009 – that's over $1 trillion more than 2008. Contact the professional who supplied you with your copy of YOU Magazine. With interest rates at or near all time lows, lower home prices, and the $8,000 tax credit for first-time buyers, it's worth the time and effort to find out if you can benefit from common-sense lending in today's real estate market. | ||||||||||||||||||||||||||||||
LO# 0915245 BK# 0904081 Corp NMLS# 3113 Corp CA# 4170013 CA-DOC180899 Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act. You are receiving a complimentary subscription to YOU Magazine as a result of your ongoing business relationship with Derek Egeberg - NMLS#180899. While beneficial to a wide audience, this information is also commercial in nature and it may contain advertising materials. INVITE A FRIEND to receive YOU Magazine. Please feel free to invite your friends and colleagues to subscribe. SUBSCRIBE to YOU Magazine. If you received this message from a friend, you can subscribe online. UNSUBSCRIBE: If you would like to stop receiving emails from Derek Egeberg - NMLS#180899, you can easily unsubscribe. Guild Mortgage (NMLS 3274) |
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