Does the current economy have you reaching for the panic button? If so, I hope to calm your nerves and set the record straight about credit markets. If you have two eyes and a pulse, you’ve undoubtedly been reading and watching reports about the wacky economic conditions our world is facing. These stories paint the picture of frozen banks refusing to lend to anyone: small businesses can’t get loans, the state of California can’t get loans, and home buyers can’t get loans. I don’t know about businesses and governments, but I am here to tell you that home buyers are not only getting loans in the current “credit crisis”, but they are getting competitive rates as well. Let me repeat myself: mortgage loans are still competitive & available for qualifying borrowers.
The only way I know how to prove this is to give you the examples of clients I am working with RIGHT NOW:
1.) 1st-time home buyer Mr. B has a 714 credit score and can document his income. He has a 5% down payment that he is taking out of his retirement accounts penalty-free. His rate is currently locked and approved for a 30-year fixed loan at 6.5% without paying any additional mortgage insurance.
2.) 1st-time home buyer Ms. S is a Veteran who qualifies for 100% financing from the federal government. The seller is paying her closing costs too, so she is buying her home with literally no money down and obtaining a 30-year fixed loan at 6.5%.
3.) 1st-time home buyer Mr. C has a marginal credit score of 646. However, his 10% down payment along with his $40K in the bank are allowing him to qualify for a 30-year fixed loan at 6.5% with monthly mortgage insurance.
4.) Home-buyer Mr. L has a 20% down payment and awesome credit. He is obtaining a 30-year fixed rate at 6.00%.
I emphatically share these examples to give you the straight scoop. Some of these clients are not “perfect” borrowers, yet financing is still available to them. While the media, who is feeding off our fear, is convincing us our global economy has screeched to a halt, their message is not entirely true. I assure you that the mortgage industry is still “liquid,” meaning money is flowing from banks to borrowers at healthy rates.
This letter hopefully counters the barrage of over-inflated hysteria you’ve been reading about credit markets; specifically the mortgage market. I don’t doubt the fact our economy is facing serious and unprecedented issues, but I refute the over-generalizations that are being made about credit markets. This is not an attempt to find a silver lining, but rather a simple matter of fact. Mortgage financing is still readily available to help home buyers take advantage of the low prices in our housing market.
Rather than reaching for the panic button, I urge you to stay grounded through these uncertain times. Don’t follow the herd out of fear. Lastly, take action to help fix our country’s troubles; get to the polls on November 4th and make a difference.
Matt Sundermier's Memos on Real Estate & on Life 