Sub-Prime loans were all the rage in the early to mid-2000s. During the unprecedented upswing in the real estate market, borrowers had the ability to purchase or refinance property up to four units with little or no money down, questionable credit and almost no income documentation. The loans were sold to Wall Street, insured by AIG and well, here we are! Now, mortgage lenders have really tightened up the way they do business. Stated income loans are no more. Underwriters are working diligently to verify a borrower's ability to pay back the money they're borrowing. Numbers are being crunched, financial data verified and all is right in the world. It looks like the new guidelines that lenders have put into place represent a pretty good safeguard against history repeating itself, right? WRONG!
Lending institutions have changed their practices now with stricter rules and thorough background checks. Today, credit scores are scrutinized, proof of employment is a requirement and you need to show further proof that you can repay the loan. Before banks and lending firms approve a loan nowadays, they check if you are capable of repaying the loan to avoid the same mistakes in the past. This still does not mean you will have a more difficult time taking out a loan. There are still ways to borrow money even with low credit scores. The Federal Housing Administration or FHA is the largest mortgage insurer in the whole world. It is a government owned institution that allows loans for single family homes of up to $729,750. Down payments are also very reasonable at only 3.5%. On their website, the FHA says that FHA insured loans only require a small amount of investment to close the loan. You can get a loan with them even if your FICO score is only at 620.
This is no joke! There are hundreds of thousands of borrowers who have purchased homes in the last year banking on receiving a tax credit from the United States of $8,000. In California, there is an additional $10,000 tax credit for first-time homebuyers ($3,333.33 each year for three years.). With the median sale price of homes in Southern California just a shade over $300,000, that means that the average FHA homebuyer is actually being paid to purchase a home! Since the announcement of the Federal Homebuyer Tax Credit, prices have risen by double digit percentages.
I am already seeing significantly lower activity than just a couple of months ago. Virtually all major employers in the United States are waiting to see what kind of effect new taxes and the health care law are going to have on their bottom line before looking at hiring again. If Middle Eastern protests continue throughout the Spring and Summer, we could see five dollar gas prices. What are these FHA borrowers going to do with almost no reserve funds, nothing invested in their homes and a 30% increase in the cost of food and transportation? It is a scary thought!
The protests and chaos in the Middle East are also raising gas prices and production costs, further complicating matters. The increase in living costs, gas prices, food, and transportation costs have dealt a blow on how people can repay loans too. The future is uncertain for many and it is beginning to worry some people. The country is suffering from a real-estate and mortgage meltdown and many people are afraid that their homes will be foreclosed. Some are wondering if the homes they were able to buy through FHA will join the next wave of foreclosures. If you have some savings left and if you are currently employed, then you should not worry too much. You can try to save your home if you still have job and can repay your loans. If your financial situation is a bit unstable, you should think about selling while you can. Another option is to apply for debt-relief. You should act immediately so that you do not sink further into debt. The longer you wait the more chances you have of losing your home and investment.
Lending institutions have changed their practices now with stricter rules and thorough background checks. Today, credit scores are scrutinized, proof of employment is a requirement and you need to show further proof that you can repay the loan. Before banks and lending firms approve a loan nowadays, they check if you are capable of repaying the loan to avoid the same mistakes in the past. This still does not mean you will have a more difficult time taking out a loan. There are still ways to borrow money even with low credit scores. The Federal Housing Administration or FHA is the largest mortgage insurer in the whole world. It is a government owned institution that allows loans for single family homes of up to $729,750. Down payments are also very reasonable at only 3.5%. On their website, the FHA says that FHA insured loans only require a small amount of investment to close the loan. You can get a loan with them even if your FICO score is only at 620.
This is no joke! There are hundreds of thousands of borrowers who have purchased homes in the last year banking on receiving a tax credit from the United States of $8,000. In California, there is an additional $10,000 tax credit for first-time homebuyers ($3,333.33 each year for three years.). With the median sale price of homes in Southern California just a shade over $300,000, that means that the average FHA homebuyer is actually being paid to purchase a home! Since the announcement of the Federal Homebuyer Tax Credit, prices have risen by double digit percentages.
I am already seeing significantly lower activity than just a couple of months ago. Virtually all major employers in the United States are waiting to see what kind of effect new taxes and the health care law are going to have on their bottom line before looking at hiring again. If Middle Eastern protests continue throughout the Spring and Summer, we could see five dollar gas prices. What are these FHA borrowers going to do with almost no reserve funds, nothing invested in their homes and a 30% increase in the cost of food and transportation? It is a scary thought!
The protests and chaos in the Middle East are also raising gas prices and production costs, further complicating matters. The increase in living costs, gas prices, food, and transportation costs have dealt a blow on how people can repay loans too. The future is uncertain for many and it is beginning to worry some people. The country is suffering from a real-estate and mortgage meltdown and many people are afraid that their homes will be foreclosed. Some are wondering if the homes they were able to buy through FHA will join the next wave of foreclosures. If you have some savings left and if you are currently employed, then you should not worry too much. You can try to save your home if you still have job and can repay your loans. If your financial situation is a bit unstable, you should think about selling while you can. Another option is to apply for debt-relief. You should act immediately so that you do not sink further into debt. The longer you wait the more chances you have of losing your home and investment.
About the Author:
You can search all of the Homes For Sale In Rossmoor right on Jeremy's site. He is a recognized author, Mensa member and Rossmoor resident. He currently lives on Wallingsford with his wife, Heather, and their three children. For more information on Rossmoor Homes, make sure to follow the links.
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