So Im sure youve been hearing about all the mortgage lenders going out of business and how sub-prime lending is becoming extinct. Well.its true! As interest rates have risen and adjustable rates have, well, adjusted, new home owners are feeling the pain. From around 2000 to 2005, everyone, including myself, was in a rush to buy a home before prices got too high. Many of these homeowners were first time buyers and had little money to put down. This is where the creative lending came into play.
Many people bought their homes with adjustable rate mortgages, or ARMs, and anticipated that their home would appreciate in a few years, giving them the ability to refinance before their variable rates shot through the roof. Now, since the market has shifted and people arent seeing 5“15% appreciation a year, some homeowners are in trouble.
The biggest problem for these homeowners, is that the once plentiful creative lending, is now just a thing of the past. Lending guidelines are much stricter today than they were just 6 months ago. I have clients who cant buy the home they wanted because the loan they qualified for just five weeks ago, no longer exists! In fact, the bank that was going to do the loan doesnt even exist anymore. More and more, I hear stories like this
Well I was going to buy this house I really, really loved, but I waited too long and now there arent any loan programs that I qualify for
As the number of short sales and fore closures rise, the number of mortgage banks will inevitably go down. Even though the amount of these types of sales are low in San Diego, especially when you compare it to the number of new homes that were recently built, they are affecting the market.
So if youre thinking about buying a home and you dont have great credit and you dont have 20% to put down.QUIT WAITING! I promise you, things will not get easier anytime soon. And in case youre curious, heres a list of mortgage banks that have imploded in the last year or so.