Buying a Home? Its Still About Home Affordability
What does it take to gat a loan now-a-days?
The Los Angeles Times- More can afford a home, but lenders remain tight-fisted
Nearly half of all California households can now afford the median-priced home in the state – but that’s no help if they can’t get mortgages. Lenders say Its Still About Home Affordability.
Making sense of the story
- Six years after the subprime mortgage meltdown, banks remain tight-fisted, even with solid borrowers – a fact they attribute to shifts in government regulation and demands that they buy back bad loans.
- Mortgage credit has not eased much since 2007, according to Federal Reserve surveys of loan officers, even while low rates and the housing recovery have borrowers lined up seeking financing.
- First-time buyers and self-employed borrowers must jump through especially complex hoops. Even gold-plated applicants must justify the smallest quirks in their finances in excruciating detail. And, processing applications can take months.
- Lenders say their cautions stems in part from uncertainty over a tougher new regulatory environment, along with unrelenting demands from government-sponsored mortgage buyers that the banks repurchase soured loans.
- Salaried professionals with credit scores in the high 700s have the best shot at being approved for a mortgage loan in this environment, along with borrowers who have never missed a payment and want to refinance.
- However, even these borrowers may face stiff documentation demands, including having to explain any bank deposit other than a regular paycheck.
In other news …
The New York Times- The time, and place, to buy
As both mortgage rates and housing prices head higher, home buyers may be wondering whether they ought to settle for whatever property they can get now, rather than risk paying more later.
San Francisco Chronicle- Home buyers face dilemma with shortage
The sharp drop in homes for sale poses a tough choice for buyers: Jump in now and compete with hordes of others or wait until inventory improves.
DSnews- Foreclosure inventory shrinks from year ago
While still at an elevated level, foreclosure inventory is fading and has fallen for 15 straight months as of January 2013, CoreLogic reported.
Read the full story
Is your home underwater? What you should know…
- One of the most-common misconceptions held by underwater homeowners is that the new California Homeowner Bill of Rights keeps a lender from foreclosing on a home regardless of whether the borrower is pursuing a loan modification or a short sale.
- However, the bill of rights is supposed to restrict lenders from “dual tracking” – repossessing a home while a homeowner is awaiting a decision on a home loan modification application.
- When a borrower sends in a complete loan modification application, the foreclosure process should instantly come to a halt. If the lender rejects the application, the borrower has a 30-day period to appeal the decision. The home cannot be foreclosed during that time either.
- In a short sale, however, the foreclosure process is halted only after all the lien holders on a home agree to the short sale and the prospective buyer gets financing. All of that can take months. The bottom line, according to one broker: “A foreclosure could easily occur during the attempt to bring about a short sale.”