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Is There Any Money Left
Sep. 24th, 2009
With the credit crises we have seen over the past couple of months, the media has buyers and sellers worried there is no money left for home financing.
With banking giants such as Bear Stearns, Lehman Brothers and many others failing, and the government bailing out AIG, Fannie Mae and Freddie Mac it is not hard to see where that fear comes from. This does not paint a very pretty picture. Consequently, the fears of buyers and sellers is understandable. Given the financial turmoil, is there still money available for home financing? The answer is a resounding yes.
With the government taking control over Fannie Mae and Freddie Mac, the largest buyers of mortgages, the federal government made sure that there is liquidity in the mortgage market. By providing financial support to allow Fannie Mae and Freddie Mac to continue to buy and sell mortgages, not only did this move provide for increased liquidity, it also contributed to the lower interest rates which we have seen over the last few weeks by easing the minds of investors in the mortgage backed security market. With the government stepping in to provide financial support to these two institutions, it all but assured the continuance of available funds for home financing. That being said, however, there have been some significant changes.
Over the past few years, home loans have been extremely easy to come by. It was often stated that if you had a pulse and a purchase contract, you could get a loan. This is no longer the case. No income, stated income and zero down loans have pretty much all gone away. Today, you actually have to prove income and have some money in the bank to buy a home. This seems logical enough. Does this mean if you have mediocre credit and less than 20% down you can’t get a loan? Absolutely not! Yes, there are credit standards and down payment requirements, but there are loans available. FHA loans have become common place again. FHA allows borrowers with not so perfect credit get into a home for as little as 3% down. Additionally, the interest rates, terms and payments are often better than that of a Conventional loan. This is great news for first time home buyers or anyone who is looking to get into a home with little money down.
Despite the troubling news we seen recently in the financial markets, there is money available for home financing. Most of the sub-prime, no income and zero down loans are gone. Yes, underwriting guidelines have changed, but rightfully so. With tighter lending guidelines today, we will see significantly fewer foreclosures in the future. Today is a great time to buy. There are many great deals for buyers, money is available and interest rates are low. If you are a renter, seek out a mortgage or real estate professional to guide you in the right direction.
Derek Egeberg (NMLS 180899 AZ 0915245) is the Branch Manager for Academy Mortgage in Yuma, Arizona. Derek has over 12 years of residential lending experience. If you have any further questions on this topic or any other, you can contact Derek at [928-247-9089] or email Derek@TheApprovalCoach.com.
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