FIRST-TIME BUYERS SEE OPPORTUNITY
HOME LOANS, TIPS FOR BUYERS
July 30th, 2008
Home prices skyrocketed during the first 5 years of the 21st century to levels unreachable
by many first time buyers. Starting in the fall of 2005, home prices peaked then began a steady decline dropping 20-40% from that peak. Entry level buyers have found opportunities to buy homes that are affordable compared to just a year or two ago. Most buyers understand they need to get their financial house in order before setting out to find a home.
Sitting down with a competent lender to review credit, income and expenses has never been more important. Loan underwriters are under intense pressure to scrutinize every aspect of a property sale including the borrower, the appraisal and the property’s condition. Any discrepancy can lead to a loan denial. Buyers that were pre-qualified just a few months ago are well advised to contact their lender to confirm underwriting changes have not changed their ability to obtain a loan.
Banks package and sell these loans into the secondary market to enterprises such as Fannie Mae and Freddie Mac. They too, are tightening their loan underwriting standards causing lenders to be very conservative granting loan approvals. Lenders do not want to get stuck holding these loans in their portfolio. Lenders profits come from the loan fees charged up front, not from waiting 30 years to recoup their capital in the form of monthly payments from borrowers. In order to recover their funds, these loans are packaged and sold into the secondary market.
The days are gone when fogging a mirror meant you qualified for a loan! Potential buyers must be diligent in making good credit decisions so they will qualify for a loan at the lowest possible interest rate and fees. Buyers should also seek information on local programs that assist buyers with downpayments. These programs can help buyers with substantial interest free loans with no payments. When the property is sold by the buyer, the money loaned is paid back and a portion of the equity from appreciation is shared with the agency that provided the funds. Redding and Shasta County have these programs available and they are seeing increased usage by first time buyers.
For further information don’t hesitate to call, email or blog me!
530-224-6767
530-941-7492
25 YEARS LOCAL EXPERIENCE
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
