Right now, there are a lot of headlines a lot regarding the mortgage meltdown. What’s hype, what’s not?
In general, I stick to my usual soap box of don’t believe everything you read and proceed with rational observance b/c “If it bleeds, it leads.” (In case you are wondering, I welcome you taking my opinions with a grain of salt too! I am educated, aware, and in the trenches though I certainly don’t know it all and am only one person with an opinion.)
What’s happened?
In summary, rates are volatile right now and the qualifying criteria for home buyers has gotten stricter, much stricter, in a very short period of time. This does not affect the majority of borrowers around the US, i.e. those looking to borrow within the “conforming” loan limits ($417,000 and under).
Obviously, with Bay Area home prices, it affects us locally b/c most home buyers are seeking “jumbo” loans.
Plus, all stated income loans have gotten much harder to get. This too affects the San Francisco housing market because so many of us use stated income loans to qualify, especially first-time home buyers.
What does it mean?
First of all, this tightening of credit has been swift and severe. Most of us anticipate loosening in the coming days, weeks, and definitely months as lenders see the opportunity to make deals and jump back in the game.
Second, it means that some of you will have a harder time making home ownership happen right now. And, I do mean right now. Things are changing daily so it’s best to stay calm and stay tuned.
Third, it means that those of you who are able to make home purchases will be able to secure great deals right now. And, again, I mean right now. Things change quickly.
If you have a down payment, can document your income, and have good credit, BUY, BUY, BUY. A large bulk of the local San Francisco competition is temporarily gone so you can get into a property for a relative steal at this moment.
I truly expect the situation to correct itself very soon. I also do NOT expect a run down in San Francisco home prices. Right now, there are deals to be had, for sure. This is especially true in the condo market.
BUT, sellers are not giving away their homes for pennies on the dollar. Yet, they may be willing to negotiate on price and even buy down your interest rate to get the deal done.
What to do?
Make sure your mortgage broker and Realtor are savvy and aware of what is going on now. This is not the time to go discount. It is the time to have a team of experts around you!
If you are pre-approved, go back to your mortgage broker and make sure you understand current pricing and whether or not your situation has changed.
If you are selling your home, look into a seller rate buy-down. The cost of the buy-down is soooo much less than any price reduction! Get the sales price you want with this savvy move.
Talk to your Realtor (me or whomever it is) and ask them how they can be creative to get you the property you want at a great deal. Do they know how to negotiate rate buy-downs for you? Do they read the financial papers? Do they know how to protect you while you are in escrow.
Get out there and look at homes. The timing is absolutely excellent for those of you who have the money, credit & income to buy.
Times have changed and we are going back to basics. San Francisco will always be amongst the MOST desirable places to live. A couple weeks or even months of lending distress doesn’t change this so go-ahead and be a “have” rather than a “have not.”
Got a question? Please let me know…
Resources:
Today’s Chronicle Article: Mortgage crunch hits Bay Area hard because of jumbo loans
