What does mortgage crisis mean for first time buyers?

Question

Given the following assumptions: first time buyer, able to make 20% down payment, excellent credit, flexible on timing, already pre-approved, silicon valley area, intends to live in 2 bedroom condo for at least 5 years. How should the crisis affect decisions, particularly concerning timing? Should I wait a few months, or get it over with? Will housing prices drop somewhat? Will I get hit with a higher interest rate for waiting?

Answer 1

Don't wait a few months. Smart buyers always love to buy on bad news. You will likely find a few sellers now that panic and will agree to a lower price than they will in a two or three weeks when better news comes out.

In the short term, in a week or three the rates may drop, but in six months time they may be higher. (most of the year 2000, 30 year fixed rates were above 8%- do you want to wait and see if it goes there again?)

Answer 2

The best time to purchase a house was yesterday, the next best time to purchase a house is today.

The mortgage crisis will affect anyone buying a home as well as refinancing a home. The reason being is that the requirements will be tighter and qualifying will be a bit more difficult than before.

You have to speak with your mortgage broker or the agency that pre-approved you about the various loans that you are pre-approved for and how they affect you.

There are lots of products you might be qualified for and you need to understand these products so you may make an intelligent decision. Just because everyone want you to have a 30 year fixed rate mortgage, this might not be the best mortgage for your particular situation.

The housing prices in California have probably dropped about as far as they will drop. The interest rate even if the fed raise or drop it in the following weeks will not affect you that much.

Beside if you are gonna make a decision on possibilities good or bad you will never make a decision. I say that with tongue in cheek, because it you have good intelligence about the rates and can wait, good for you.

I hope this has been of some use to you, good luck.

"FIGHT ON"

Answer 3

the appropriate time to purchase a house became into the day gone by, the subsequent appropriate time to purchase a house is immediately. The very own loan disaster will influence everybody procuring a house besides as refinancing a house. the clarification being is that the standards would be tighter and qualifying would be somewhat harder than till now. you are able to desire to chat which includes your very own loan broking provider or the enterprise that pre-authorized you with regard to the countless loans which you're pre-authorized for and how they influence you. there are various products you should be qualified for and you are able to desire to appreciate those products so which you may make an smart decision. purely with the aid of fact every person desire you to have a 30 3 hundred and sixty 5 days fastened fee very own loan, this would no longer be the appropriate very own loan on your particular subject. The housing expenditures in California have in all probability dropped approximately so some distance as they are going to drop. The activity fee whether the fed advance or drop it interior here weeks won't influence you that lots. Beside in case you're gonna decide on possibilities reliable or undesirable you will under no circumstances decide. I say that with tongue in cheek, with the aid of fact it you have reliable intelligence with regard to the quotes and would wait, reliable for you. i wish this has been of a few use to you, reliable success. "combat ON"

Answer 4

The mortgage crisis should cause the housing prices to drop substantially. Home prices before the crisis were over priced. DO NOT get an adjustable rate mortgage. Most of the defaults are caused by ARMS and interest only loans. Make an offer lower than what is listed. You are in the driver's seat.

Answer 5

With your situation, you can ignore pretty much everything you hear except for the overall rates moving.

Full-doc Fannie Mae/Freddie Mac/FHA/VA loans are all still there, healthy, no problem.

I would, however, try to make sure that you are working with a strong bank, since many smaller lenders are getting wiped out. A broker is fine, as long as they are placing your loan with a big bank. For example, Citi or Wells Fargo, not some company like that American Home Mortgage that went belly-up last week.

Answer 6

With the financial situation many of the lenders are experiencing on Wall Street, the days of “as long as he/she/they can walk and fog a mirror” are over for the foreseeable future.

The credit reins were tightened. From the time of application up to and including "a final bring-down" at the settlement/closing/escrow, mortgage companies, banks and other legitimate lenders increased the number of credit report investigations.

In the event its discovered a potential borrower bought a new car, boat or did something which will put that lender at a higher risk for re-payment by the borrower, the lender can simply call the title company where the settlement/closing/escrow is being held and inform the title clerk not to proceed with the closing.

One of those "somethings which will put that lender at a higher risk for re-payment by the borrower" is co-signing for a loan for someone else.
PLEASE DON'T co-sign for any one for any reason at any time for any amount.

Thank you for asking your question. I enjoyed taking the time to answer your question. You did a great job - not only for your information, but for every other person interested in reading my answer.

I wish you well!.

VTY,
Ron B.

Answer 7

There are two common types of programs that are currently available for A-paper borrowers.

10% down is becoming the new "standard" because I am seeing more and more of my lenders dropping even 5% down programs.

FHA...will be back once again...it will always be a 97% program, and when things like this happen, FHA always comes back to help first-time homebuyers, both those with excellent as well as dinged credit.

Answer 8

Hang on till next week I think the Feds are going to drop the rates and the mortgage rates should follow. Just an opinion ask your banker for proper direction.

Answer 9

The crisis shouldn't affect your ability to get a mortgage. It might however, cause the rates to continue to rise. The mortgage crisis is because of the sub-prime loans and rates made to folks who would have trouble getting a regular mortgage.

Answer 10

Even if prices drop temporarily they will not drop dramatically or permanently in Silicon Valley unless there is a major ecomonic shift in that area, i.e. lots of tech companies go bust. I would buy and quit worrying.