I've spent the past two days in the Accredited Buyer Representative (ABR) certification course, which is why my posting are late. Well folks, the sky is falling when it comes to loans in Texas (and all across the U.S).
Texas real estate is still very hot, but the seller's market has cooled in most major cities. As you may know, the easier it is to get a loan, the more buyers you have. If it's tougher to get a loan, there are less buyers who are able to purchase a home. With the current mortgage fallout, qualified buyers become a premium and can now better negotiation on the purchase of a home.
WHAT'S THE DEAL WITH LENDERS?
The big problem with lending is that jumbo and stated income loans are extremely tough to obtain unless you have excellent credit, a sizable down payment, and will occupy in the property. So what happened?
- Too many loans with "loose" lending guidelines were issued. These loans often did not require proper income verification, offered investors zero-down or low-down loans, or were otherwise risky.
- Foreclosures and defaults skyrocketed all over the country, partially due to these loans, but also because property values fell during market corrections.
- The result: institutional investors who purchase sub-prime and jumbo loans are running scared.
THE GOOD, BAD and UGLY
The bad is that it will take some time to get a stated income, investor or jumbo loans.
The ugly is that home purchases are falling apart on or before closings because the buyer's loan product is no longer available. Investors and other home buyers should now expect to put 5-20% down.
The good is that you now know about this situation, so tell your friends and family to solidify their loan with an FDIC insured lender before they even go out to look at properties. Sellers should verify the buyer's pre-approval letter, which should be submitted with the offer.
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