The Bay Area is one of the greatest places in the world to call home. There are many things to do, places to see, a wide range of cultures and many job and business opportunities. There is also a great demand for housing with only 15% of the population being able to afford homes. With the most recent events that have taken place in the mortgage finance sector, It has become much more difficult to enter the market place for first time buyers. The days of anyone being able to qualify for a loan are long gone and the mortgage fraud cases are stacking up. There have been more than 120 lenders that have closed their doors in the last two weeks and more are on the horizon. Why is this happening? What does this mean?
The investors who buy loans in the secondary market are reluctant to purchase these loans because of the risks involved. Interest rates for jumbo loans ( loans over $417,000 ) have significantly gone up making mortgage money much less affordable. Investors are weary to purchase loans that don’t fit into Fannie Mae or Freddy Mac standards because of the amount of foreclosures stemming from bad loans to begin with. To sum it all up: Investors are asking for higher interest, more documentation, higher credit scores and many are not doing stated income at all. This means that there will be less qualified buyers and a massive amount of inventory on the market. The good news is that now is a great time to buy and it’s looking like it will stay that way for a while. The Bay Area has historically been a stable investment over time and the market will rebound in time.
There are still some ways to get the right financing. The best things to do are to have a down payment, pay off as much debt as possible and find new ways to increase income. All of these things will prove favorable in the eyes of the underwriters and make it easier to get approved for a loan. Make sure who you are working with and that the lender has the ability to fund and close the loan. This has happened many times recently with lenders not being able to fund after all the documents have been signed. There are also many ways to clean up credit issues and boost credit scores up to where they need to be by doing some very simple things. Most of us don’t look at our credit all the time and have no idea what it says on the report. It is probably a good idea to pay attention to credit reports once in a while to avoid any potential surprises. Lenders are also doing away with alternate credit and so this is a very important step in the buying process. Contact us for more tips about purchasing a home or qualifying for a loan.
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