Thursday, August 9, 2007

The Mortgage Mess

What Does It Mean To You?

I am sure most people are aware of the major changes in the mortgage markets this past week. Some are calling it a crash, and others are calling it a correction after a few years of out-of-control loan practices. But what does this mean to regular consumer or the buyer on the market right now? After checking in with several mortgage brokers and my colleagues, this is what I have to recommend.

First, the rules are changing fast. Loan guidelines are getting tighter. Much tighter. If you are pre-approved for a loan, don't assume that pre-approval is still valid. Check in with your mortgage officer to re-run the numbers. Chances are that your access to money has been restricted.

Second, if you are getting ready to hit the market, know that you better have very good credit and some serious money ready for a down payment. It looks like the days of 100% financing are least for know. Some of the mortgage brokers that people are still calling them saying that they know that the market is changing, but how do they get 100% financing now. Well, the answer is: you don't get 100% financing.

Third, if you are making an offer, make sure to get a loan contingency. These have been out of favor in the East Bay real estate market for years, but you will need this now to cover yourself.

That said, this can be a very strong buyer's market right now. There is a lot of inventory and also a lot of price reductions. Sellers are getting a little worried. That means the power is shifting to the buyer when it comes to offers and negotiations. If you are ready to hit the market, let me know. I can be reached at 510-547-5970 x57 or

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