The Daily Dirt - Why Is It So Difficult To Get A Home Loan?

03/2009 Vol 2, Issue 3.11 Take The Current Poll: When do you think is/will be the best time to buy your next home?  Why Is It So Difficult To Get A Home Loan? Dear Blog,     If you have any feedback, please let me know (good, bad and ugly) at mj@milehighhomehunter.com     By the way, I have set up some real estate resources for you on Amazon.com.     Are you: Needing a new computer to do taxes? Check out: Sony VAIO Laptop PC A first time homebuyer? Check out: The First-Time Homeowner's Handbook Investing in Apartment Buildings? Check out: Investing in Apartment Buildings Investing in Real Estate? Check out: The Pre-Foreclosure Property Investor's Kit Needing tools for your next "Fix n' Flip"? Check out the Amazon.com pre-canned search here  If you are looking for anything else, check out any of the affiliate links under the "Amazon.com: Real Estate" button on the top of my website: www.MileHighHomeHunter.com Join our Mailing List! Market Place Links   Have something to sell? A small business to promote? Contact me to have your link added here:   Shop for real estate books   Shop for home improvement tools    Experience Renewal   Get Financial Renewal Quick Links Foreclosure Homes Market Stats Valued Lender Referral Search for Homes    Why Is It So Difficult To Get A Home Loan? Answers To A Popular Home Buyer Question   - Realty Times It seems like every day someone is asking about why it is so hard to get a real estate loan. Just two years ago anyone, and I mean anyone, could get a loan to buy a house or condo. Well, the times have changed and rules from the lenders have changed right along with the times. Think for a second of home loan guidelines being similar to the old pendulum clocks. Just a couple years ago the pendulum was to the left, and it was probably too easy to get qualified. But now the pendulum has swung all the way to the right, and it is very difficult to get qualified. Often, the lending industry swings its requirements from one extreme to the other without stopping at a sensible middle ground. For now we will not explore the cause of this change, only the new requirements. Keep in mind though that these will change over time as well, hopefully to a more moderated middle ground but only time will tell. For those looking to get qualified in this tough market, please note the criteria below: Fico Scores These must be better than average (600+), and when the credit report is run there must be no Bankruptcy (BK), and likely no "collections" of accounts will be allowed. Down Payments Buyers must have some money to put down, no longer will the lenders approve 100% financing, most likely the lenders will require 10-20% down (except FHA which allows only 3% (3.5% in 2009)). Ample Income All income will need to be verified with pay stubs two year period and IRS and State tax filings for 2-3 years. Then they will calculate your debt-to-income ratios (looking to see that you can really make the payments). Each lender has different ratios they will pass or disqualify with. As a general rule, these days they are wanting to see much smaller debt-to-income ratios. In other words, the banks want to see borrowers with more income and less outstanding debt obligations. Stated Income This (with no verification) is no longer available, meaning quite a hardship on the self-employed, but lenders are very risk averse now. The only exception is if buyers have a very hefty down payment like over 30%. Proof of Funds A few months worth of recent bank account statements will be required to show that money is really available for closing costs and down payments. Reserve Funds Many lenders require that the borrower have reserve cash on hand to cover two to six months worth of payments. Non-Occupants If the property is not going to be the home of the borrower (like a rental) then most lenders will increase the interest rate on the loan. Limited Holdings Restrictions are also placed on many borrower that this property will not increase their rental holdings to more than 4 units. Lenders are very suspect of investors that might be over leveraging themselves. Obviously, only very qualified people can meet the above criteria, and that is just what the lenders want in a time of uncertainty and massive losses. For the time being they can't justify making any more high-risk loans. Hopefully, knowing what is needed in advance to get approved, buyers will understand that it is critical to prepare early and get their ducks in a row before starting the home buying process. For those lucky enough to be qualified in today's market, a wide range of opportunity awaits them. Bob Foust is the chief executive for the FOUST Team at C21 Discovery; one of the top-selling real estate teams in Southern California. He specializes in Orange and Los Angeles Counties and operates one of the area's most informative real estate websites. To contact him or learn more about real estate in Orange County, please visit FOUSTonline.com.   "A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty."  - Churchill     Want The Latest Real Estate News? -- Contact me get automated updates for your home, neighborhood or a neighborhood where you are looking to purchase Click Here To See My New Real Estate Video News Channel! As always, whenever YOU are ready, I am here Selling Colorado...One Dream at a Time™     And, if you know of someone that is looking to buy or sell, I am NEVER too busy for any of your referrals.       Kind regards and happy "Home Hunting",      Michael J. Clarkson   Broker/Owner - Mile High Home Hunter Realty  303.332.6393 MJ@MileHighHomeHunter.com        On the web: http://www.MileHighHomeHunter.com http://www.MileHighForeclosure.com http://www.TheHomeHunterBlog.com

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Market Trend Analysis - Denver Metro Selected Towns/Cities

 

 

Market Trend Analysis - Denver Metro Selected Towns/Cities
Based on information from Metrolist, Inc. for period February 2009
Single Family Residences - All Price Levels
Excludes Housing Not Listed in MetroList
Note: Six (5.5 to 6.5) Months of Inventory Tends to Indicate Neutral Market, Over 6.5 Months a Buyer's Market, Under 5.5 Months a Seller's Market
(How Calculated)		A		B	C = B/12	D = A/C		E
		Active	% of Market	Sold in Past 12 Months	Sold Per Month	Months of Inventory	Current Activity Status	Curr Month Under Contract
Market below $400k		9,840	61.14%	31,818	2,652	3.71	Seller's Market	4,094
Market above $400k		6,253	38.86%	5,435	453	13.81	Buyer's Market	604
Market below $200k		3,833	23.82%	16,915	1,410	2.72	Seller's Market	2,454
By $100k Breakdown
Price Range		Active	% of Market	Sold in Past 12 Months	Sold Per Month	Months of Inventory	Current Activity Status	Curr Month Under Contract
$                  -	$        100,000	642	3.99%	5,256	438	1.47	Seller's Market	777
$        100,001	$        200,000	3,191	19.83%	11,659	972	3.28	Seller's Market	1,677
$        200,001	$        300,000	3,522	21.89%	9,994	833	4.23	Seller's Market	1,126
$        300,001	$        400,000	2,485	15.44%	4,909	409	6.07	Neutral Market	514
$        400,001	$        500,000	1,668	10.36%	2,395	200	8.36	Buyer's Market	239
$        500,001	$        600,000	1,067	6.63%	1,131	94	11.32	Buyer's Market	125
$        600,001	$        700,000	798	4.96%	605	50	15.83	Buyer's Market	69
$        700,001	$        800,000	552	3.43%	392	33	16.90	Buyer's Market	33
$        800,001	$        900,000	377	2.34%	254	21	17.81	Buyer's Market	39
$        900,001	$     1,000,000	331	2.06%	159	13	24.98	Buyer's Market	27
$     1,000,001	No Upper Boundary	1,460	9.07%	499	42	35.11	Buyer's Market	72
Total (Seasonally Adjusted)*		16,093	100.00%	37,253	3,104	5.18	Seller's Market	4,698
Total (NOT Seasonally Adjusted)**		15,228	xx	37,246	3,104	4.91	Seller's Market	3,352
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Note: This representation is based in whole or in part on content supplied by Metrolist, Inc. Metrolist, Inc. does not guarantee nor is in any way responsible for its accuracy. Content maintained by Metrolist, Inc. may not reflect all real estate activity in the market.
* Uses 12-trailing months' average to smooth out the effects of Denver's purchase season (60% Apr - Sep; 40% Oct - Mar).
** Uses raw data to show the impact of current levels of purchases on current levels of supply.  This causes substantial seasonal swings in months of inventory. MetroList cutoff date may likely differ from date of data shown above.

 

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Michael J. Clarkson Broker/Owner, GRI, MBA
Work: 1.303.317.2478 Mobile: 1.303.332.6393 Fax: 1.866.723.4337 Email: mj@milehighhomehunter.com IM: mjclarksondenver (MSN) Home Page Mile High Home Hunter Realty PO Box 837 Erie, CO 80516 USA
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