Magic Words for Mortgages Summer of 2007

What are the Magic Words for Mortgages in the Summer of 2007?

© Arthur Gahagan


Due to “growing industry-wide concerns “ the xyz loan program is suspended. The news today is that as

the lending industry evaluates the fall out of the loans “gone bad “ in 2007, more is yet to come. National lenders

are announcing lay-offs across a wide spectrum. As you might guess, the programs that will die first are the ones that

were easiest for “ Joe & Jane Buyer “ to qualify for. These would also be the ones that carried the greatest risk for

the lenders.


Everything goes back to Econ 101. Supply and demand is still and probably always will be the “ name of the game.”

Easy to figure out, when you think about it. When the dot-com crash occurred back around 2000-2001 where did the

money go? A considerable amount went into real estate, as financing was easy, and profits were good. In 2006 and

on into 2007, huge amounts of real estate found its way into inventory “ for sale. “ Today in many parts of the

country there is still huge amounts of unsold inventory.

Do you think that some of the investors fortunate to cash out of real estate, might have headed back to the stock

market? I think it might be a good assumption, didn’t the market recently go over 14,000 for the first time?

What do “ growing industry-wide concerns “ mean to you? It could mean a good many things that will make it harder

for you to qualify for a loan to purchase a home, or a loan to re-finance a home loan you may already be in.


The first thing that will happen is that credit guidelines will become much stricter. Underwriters will analyze

appraisals much more closely and some lenders might even cut appraisals in certain areas if they feel that a

“market is declining. “

They will lower their loan to value ratios that will cause you to have to come up with more cash as a down

payment, or to have to carry some type of mortgage insurance that will protect them in the event of your

default. Many lenders will participate more in the funding of government type loans, such as FHA, USDA,

etc. because of the safety features that are built in to those types of loan products.

Loan programs will begin to vanish from the scene for those buyers that are not considered to be “mainstream”

and by that I mean a W-2 employee, on the job at least two years, good credit, etc.

Buyers, you must realize that even if you have only one 30 day late on your credit report, you are considered to be

“derogatory.” The reality is that only about one third of the people out there even know what is on their credit

report.

Your credit is the thing you need to pay the most attention to, especially in times where financing begins to tighten.

You need to know that the history that is reflected in your credit report tells the prospective lender about the

probability that their loan will be repaid. It may come down to “will you pay” as opposed to your “ability to pay.”

If you have questions or concerns, please feel free to visit us at our blog or on our website.

Our blog info is : http://www.blog.tampabaycreditdoctor.com and our web site address is :

http://www.tampabaycreditdoctor.com




Arthur Gahagan is a real estate Broker at On Your Way Home Realty and
is also a licensed Mortgage Broker. He has authored an e-book and has been
in real estate and mortgage financing for over 28 years. If you have questions
or comments please send by email to agahagan@hotmail.com or visit the web
site http://www.tampabaycreditdoctor.com