Well, I’m sure that title got your attention. And it’s not like it’s too far from the truth : people that shouldn’t have got loans did. Underhanded methods were used, and now we all pay for it.
Luckily, the only way the investment market was hit, is now the loans are just a bit harder to get. There is even MORE incentives offered then before. But….
Our booming real estate economy finally popped. We all knew it was coming. The sellers market is gone. Now we are faced with millions of foreclosures nationally, some pending, some not even started yet. All of them looming over the peoples head’s though. People feel betrayed, by simple interest only adjustable mortgages. The intention was to get a 2 year interest only adjustable, and then refiance the mortgage. But the market crashed, home values dipped down, so before when you had your 100% financed home at $250,000, it’s now only 230,000. You can’t refinance the mortgage without coming out of pocket.
But what does this mean for the home buyer? This means that people want to sell. Now it’s a buyers market. People are offering deals you never could have imagined, from money below appraised value, to money at closing, home warranties, you name it. The problem though, is getting your mortgage.
With more lenders closing their doors every day, a dire situation is brewing in the mortgage industry. With less funds available to lend out, combined with tighter security checks to make sure the people borrowing the money can actually pay it back, it all adds up to a more difficult process in buying a home.
Can’t say we didn’t do it to ourselves though.
According to Reuters UK Article (see Related Links), “that $150 billion to $250 billion of permanent capital is needed to normalize pricing in the depressed market for U.S. mortgage-backed securities.”
Real Estate and Mortgages will balance back out, that much we know. It cycles between booming and whichever term you want to use for our current and imminent state. So with time, and the proper stance, the industries can recover from the massive amount of under dealings that were committed.