Under much scrutiny and acute observation, the Mortgage Industry faces times that our economy is currently ill-prepared for. It has for some time. I recall stating six months ago in a post, that around this time we'd be feeling the brunt of the burden being lifted off our shoulders. I was wrong. See, guys really can admit when they are wrong:-)
Ride out the storm, just don't stop.
There is good news and bad, I'll start with the latter:
- You are going to need money to buy a home. Sorry, that's the fact of the matter. Now, folks will say that current economic and financial conditions prohibit them for being able to do that (have extra money of any kind), yet that's where we are at. Perhaps I'll write a post soon that illustrates simple ways to save. And you won't even have to pay for the privilege of my sharing;-) Speaking of non-profit entities, make all checks payable to the International Bank of Jason Sardi.
- Credit Scores are more important than you may think. Beyond the credit history of your payments to the precious folks you owe money too, Credit Scores are crucial! And I'm not talking about just getting approved for a loan, I'm talking about the interest rates & costs provided to you because of your score. It can mean big bucks monthly, even bigger bucks annually and over the life of the loan, if you chose to keep it. Of note, if you want to steal somebody's identity, make sure it's a good one. There is little that is worse than dealing with someone who stole the identity of somebody else who shows the chronic disappointment of never being able to pay their bills.
- Down payment assistance looks to be dying a slow death. I'm not entirely opposed to DPA's (Down Payment Assistance) but I must say that it is long overdue that we rely on ourselves rather than help from somebody else. I'll get to that in a moment...
- If you can't document your income, you're in a bind. The 'under the table' lifestyle is one that lending institutions seem less and less inclined to lend too. If we were playing a game of spades, Uncle Sam is holding the joker.
Onto the Good News:
- There's a large inventory of homes on the market. Patience & Persistence will prove wise. You can be picky but don't let time pass by too fast, those who hesitate ... it may cost. When you find, buy! There's plenty of money to be made in any market, especially this one.
- Cheap money is still available. I'm amazed at how spoiled we've become. A 6.5% fixed rate on a 30-year Mortgage is high? Wowsers, get a grip. That's cheap money, if you qualify. And generally speaking, I don't care what interest rates are, you can buy a home or pay on the one that your landlord already bought. That's your choice. Sometimes, renting is the better choice. In the long run, that's rarely the case.
- Your sample of Mortgage Professionals has shrunk. Now, this may be constued as a negative thing, but I dare say it is just the opposite. While you'll probably never get rid of every seed that comes from a bad apple, you can be somewhat sure that those still doing business are there for a reason. Utilize their knowledge and services, the 'Talking Heads' are going out of season.
I made mention earlier about relying on ourselves, rather than assistance programs that may get us into a home in the first place. I'm not the biggest advocate of those programs and am certainly not their biggest detractor, but let's think about this. I have a problem with the sales pitch involved. Buying a home with no money down is certainly a convincing tale. Yet, if anything goes wrong with your home ... guess who has to pay for it? Yup, you. Having money in the bank after closing is something I'll harp on until the cows come home to be milked. It's in your best interests, that's all.
One other sidenote, when the media has an appetite, we're for dinner. Watch your local and national news, but please remember they don't know shit. These are the same organizations the are ridiculing each other. 'News' has become what the other 'News' organization is doing. Right....
All else economical, that's a different story. Just hold on folks, the calm will come.
Sardi - I misread your title. Thought is said "Waiting for the Clam" and would be about Howard Johnson's.
Great points though. Money is still pretty cheap. In the 80's 15 - 18% wasn't unheard of. In the early 90's 7 - 8% was norm. We have had a few years of really cheap money and gotten spoiled.
VA and Rural development loans are still available with no down. Granted, not everyone can (or should) qualify.
The chaff is leaving, the good guys are left. Keep it up.
BRAVO. Straight and to the point. Did I have buyers buy homes with 100% financing, sure- but they totally understood the deal. I would hold them by the ears and say "you get this, right?" Knock on wood, I don't think any of them are in trouble.
I agree, there are reasons for lending guidelines to buy a home. Having some cash is part of that, it is a giant commitment and needs to be tended to. BTW, when I was a new agent the rates were like 11% and 12%, we sold houses all day, you are right - we are spoiled and think 6.5% or 7% is bad nowadays.
As always, great post!
PARKED
Well done Jason. I've always refused to involve myself in any transaction where the buyer does not have adequate reserves. Home ownership is a responsibility, not a right. That responsibility requires the ability to care for your home and it's maintenance. Even those with reserves can find themselves in a home repair quagmire. It happens almost too easily - as we both know :)
Sorry I missed the nap. I could sure use one ;-)
Jason, nice little post there. It's sort of a "forward to the past" sort of thing. This is how things were for most of my career.
You were wrong? I'll be back later. Have to go write this date down in my calendar. JASON SARDI WAS WRONG.
This post is excellent. I like your saying that people need to expect to have some money to put into a home and have some left over for repairs, if needed. Thanks for putting it clearly.
Jason- So, my buyers need money to buy??? Now isn't that a novel concept. We really are spoiled as you said, but hopefully interest doesn't go back up to the high double diget numbers of days gone by :)
Very well written by the way :)
Jason, Jason, Jason, so much to say in so little of a space. How can anyone deny your logic. Yes rates are low. Yes, prices are better. Yes, it is the right time to buy (probably). Well stated. Give 'em hell Jason.
Jason,
Nice overview!!! Problem came about when we started selling homes to people who couldn't even afford qualify to buy a car!!! Thanks, Fran
Jason - reading backwards - so for a "last" localism post - very nicely done! The good people of Pennsylvania need to know who is going to give them straight talk and solid information. It's always been my contention that you are well spoken, especially for the hard working people you are attracting as readers.
Mike - Let's hope, man. Let's hope. I hate to throw out a cliche but it is all I got, "Time is the only Teller."
Audrey - As always, you should be on pay roll for the comment;-)
Jennifer - And only with me...
My Jennifer - What are your thoughts on a snap:-) I probably got this from my Mother (not the snap) , but I harp on the education of it all, at least now. Over eight years since I graduated College and now I kind of like the subject. Go figure. Hey... I love you!
Patricia - I'm feeling some 'M.J. FOX' action going on. I've talked to many experienced people and they've said the same. In a not-so-strange way, I think that's part of the cure in any perceived mess.
Sandra - Yes, I sometimes AM!
Barbara - It's a rarity when I put anything clearly but thank you:-)
Kathy - Thank you, I'm trying over here...
Fred - It's not as good as giving them a piece of heaven, but it's passion in the news.
Fran - Yup, and who did the Title Work on those transactions;-) Kidding, my friend. Yet, those kind of statements stir the pot. I guess we'll have to watch the flame, wear a mitten, and be strong enough to with-hold the storm steam. Or... we can live our lives and not worry about the mundane stuff.
Eleanor - Sorry for the bluff, I write on a whim. I have much to learn, much to learn. Thank you for the compliments, that means a great deal coming from a gal like you:-)