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Can I get a LOAN???

Marcus Santo…, Real Estate Pro in Litchfield
Written by Marcus Santore, Real Estate Professional in Litchfield
October 17, 2008 8:16 AM in Market Conditions  |  Litchfield
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I have been asked several times over the last month whether or not a person can even get a loan today to buy a house.  Lets face it, doom and gloom sells.  It always has, and it always will. I will be the first person to tell you that this "new" mortgage crisis,as our country has been through them before (80's and 90's), has expanded well beyond our borders and will have a resounding effect for years to come.  This is not news.  But, for a moment, lets sit back and look at it.  The customer with a 580 credit score, no down payment, and 18 months of job history should never have bought a home.  They were simply not prepared.  While home ownership does have its advantages, a buyer, needs to be informed and prepared in order to successfully own and operate a home.  Arguably, the single greatest commodity to the American family.  The buyers that have maintained good credit, have saved for a down payment, and are currently employed in the same position for a minimum of two years do have financing options. There is still 97% financing available, thats only 3% down payment. The buyers that are not in the same position will have no choice but to realign their debts, budget accordingly, and save for the purchase of a home.  Its called FUNDAMENTAL LENDING GUIDELINES.  Many generations before us saved, put 20% down, payed the house off and then had a mortgage burning party.  The home was considered the primary commodity.  NOT an ATM machine with which to refinance several times, each time pulling more and more equity from the home.  Eventually the home is stripped of equity and leaves the homeowner in a weak position when market conditions adjust a homes value.

Please contact me with any questions 

Thank you in advance,

Marcus Santore
Marrin  Santore Realty
www.litchfieldconnecticut.com
860-567-4551  

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Comments

By Deep River,  Fri Oct 17 2008, 08:44
In spite of the media hoopla, the vast majority of Americans will have no problems obtaining a mortgage. The percentage of people who have been "cut off" by the elimination of subprime lending or reduced doc loans is relatively small.. I'd guess less than 10%.

"The buyers that have maintained good credit, have saved for a down payment, and are currently employed in the same position for a minimum of two years do have financing options. "

Absolutely correct.
1.) Pay your bills on time
2.) Put money in savings
3.) Avoid credit card debt. In fact, avoid over-leveraging yourself
4.) Don't job-hop

Follow those four simple rules and any bank will welcome your business.

The only folks who might be cut off but otherwise would have been excellent candidates are the self-employed who show little or no profit in their business. "Stated Income" will cease to exist at the end of the year... unless the S/E borrower doesn't mind 25%-30% down and rates 2%-3% over FNMA rates.
By Voices Member,  Sat Nov 8 2008, 02:41
Good morning my dear brothers and sisters in Christ, I am Mr Blair James, a reputable, legitimate and accredited money lender. I loan money to people in need of financial assistance at 3% interest rate. Do you have a bad credit or are in need of money to pay bills? Let me take this medium to inform you that I assist beneficiary reliable as I'll be glad to offer you a loan.Please write with the below information. After the reply, you will be sent a loan application form to fill. (There are no credit check, 100% Guaranteed!) I hope you will allow me to be of service to you. Sincerely. Contact us via email: (privateloaninvestment1@yahoo.com) with the Applicant Information below:
Full Name;Country:Amount Needed;Monthly Income
By Vishwa,  Sat Nov 8 2008, 03:34
Good Information
By John the Bruce,  Sun Nov 9 2008, 18:23
I’m assuming that your fantasy 97% LTV loans probably don’t cover your average $600K home in Fairfield County. And here’s the rub: the people smart enough to be sitting on 20% down payments are not buying now, friends.

We’re still far away from approaching a market-clearing price in Connecticut. More cheap money isn’t going to put lipstick on this pig. Downward pricing movement will drive real gains in sales volume.
By Daniel,  Sun Nov 9 2008, 18:29
First of all, dont ask a realtor if you can qualify for a loan! Ask a mortgage professional! Hell, many realtors think closing cost is 3%!
By Marcus Santore,  Tue Nov 11 2008, 13:09
John the Bruce. There is no fantasy 97% loans here. In 1934, if you know the history of the country, we were in bad shape. Thats actually when Congress created The FHA. This economic crisis we are encountering is far superior to the Depression of the 1930's, in my opinion...much more global impact. The FHA will continue to write high loan to value loans to place people into home. In reference to your question about loan limits. In Fairfield County the limits for a single family home right now is $708,750.00. So your assumption is incorrect. There are, in fact, ways to finance homes in Fairfield County. One must be able to prove that they can afford the home, but none the less, the loan will be written.

I work both as a mortgage broker and a realtor. That being said, I am able to quilify borrowers. In fact, I have them go to the local bank for financing prior to using me. Sometimes the bank will pick up some closing costs.
By John the Bruce,  Wed Nov 19 2008, 11:44
So, have you recently sold a home wherein the purchase price was around/about $700K with a 3% down payment of $21K?

If so, please let me know the bank that did the underwriting, as it might be an excellent shorting opportunity.
By Dp2,  Thu Nov 20 2008, 01:26
Actually, some of the brilliant ones are buying REOs in bulk.

The S/E (and others for that matter) have another option: creative financing.

As soon as the conventional lenders get tired of seeing enough money walk out of the door, they'll begin to lobby/beg Congress to relax a few of the restrictions.
By Marcus Santore,  Thu Nov 20 2008, 06:12
NO. I have never sold a home @700k. That market has never presented itself to me. That does not change the fact that the product exists and can be used. Most of the properties that are moving in my backyard, are consistently between the 200-500k range.
The FHA sat on their hands for a long time for a few reasons. One, they could not compete with the subprime product. Another, because brokers simply did not want to take the time to learn and understand The FHA guidelines. Its a tedious, more involved process to say the least. Dp2, I agree 100%.

You may want to check with some approved FHA lenders in your area to see what they are writing. If you have good job history, sufficient income to prove that you can carry the debt, and a credit report that shows that you have made effort to maintain good standing, you will get purchase money financing.
By John the Bruce,  Fri Nov 21 2008, 07:55
Why buy before the panic is fully realized?

DP2> Buying REOS in bulk? I think you'd be better off buying Tulips or shares in WaMu.
By Marcus Santore,  Fri Nov 21 2008, 09:46
Several arguements can be made as to why to buy now. However, it depends what you are buying for. If you are purchasing to maximize a short term cash investment, I would agree with you...this is not the flip market that once was. When I mention "flip market" , I am not referring to those investors that actually do the proper work necessary to update/remodel a home. I am refering to the people that were predatoriarly locating financially strapped home owners, and literally, stripping the homes equity out from underneath them. I watched it happen, we all did. Those investors are clearly part of the mess that we are in. That being said, if a person is renting, relocating, or simply in the market to purchase an owner occupied home. There are great deals on the market right now. The purchase of an owner occupied home is not purchasing an ATM machine. It was treated like that for many years. Now people need to go back to the Fundemental reason for purchase a home, and that is to have and own their own home. For these clients, again, who have employement history, who have sufficient income to buy, and have displayed over the last 5 years a willingness to maintain good standing with creditors, there is and will be money available for financing. I do not work with many investors, I focus on clients that are trying to purchase a home for the purchase of a home, not to cash out, drive a Hummer, and wear a nice watch.
By Dp2,  Sat Nov 22 2008, 05:20
Bruce, the "time value of money" is one reason why to buy before the panic. For example, let's say that you could purchase a property today for $100,000 (80/20 with a 30-year fixed mortgage at 6.5% interest) today, and rent it for $1,000 per month. Let's also say, that if you were to wait 6 months, then you'd be able to purchase that same house for $99,500. Although you would have saved $500 on your purchase, you would have missed out on earning $866.10 before taxes--a net loss of $366.10. That loss doesn't even factor in the lost opportunity for depreciation.

Plus, in some markets it's possible to purchase some, residential REOs for $1,000 (or less).

Let's say a buyer does the following: 1) purchases 5 REO single-family properties for $1,000 a piece; 2) puts $15,000 into each property for rehab; 3) rents each property for $500 per month; and 4) finances the properties 80/20 using a blanket-mortgage, amortized for 30 years at 6.5% fixed interest, with a 10-year balloon.

That buyer would pay $379.24 per month, and that buyer's annual, pre-tax cash-flow would be roughly: .65(12)(5)(500)-12(379.24) = $14,949.12. Not bad for an investment of $20,000.

Now, where are the tulips or shares in WaMu that will at least return that yield?
By John the Bruce,  Thu Dec 18 2008, 19:49
Dp2 – I don’t think I’ve ever seen such a poor example to illustrate an equally poorly thought out position.

Your example posits that prices are going down 1 percent per year. (.5 over 6 months). If prices only went down one percent per year, per your example, we wouldn't be having the problem we're in now, would we?

You have enough knowledge to be dangerous. Good luck, friend.

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