Monday, March 1

How the Bailout is affecting Mortgages

According to a detailed article by Matt Tiabbi for Rolling Stone, ominously entitled "Wallstreet's Bailout Hustle", the Federal government has been printing more money and using it "to buy mortgage-backed securities in an effort to spur home lending" (Rollingstone's March 4th issue, p. 53). This opened up huge avenues of money-making for the large banks. However, the Fed is planning on trying to get out of the home lending market, beginning this month. Per the article, home lending money is going to dry up again. Loans will be fewer and harder to get. "The Mortgage Bankers Association expects the number of new residential mortgages to plunge by 40 percent this year" (RS p52). FHA lending, which really helped for awhile, is tightening. Spot-assessing in order to do an FHA loan is no longer possible, having stopped February 1.

What does this mean for buyers? Money is going to tighten up again. The larger the down payment and the better your credit score, the more likely your loan will be approved. Loans with less than 20% down will be much harder to get.

What does this mean for sellers? Keep in mind that appraisals will be more stringent and since there is a smaller pool of sales to choose from, even if you get a high number on your property, it may not appraise. Be realistic about the value of your home. Carefully go over the comparables and price your home accordingly.

No comments:

Hoboken Realtor on Real Estate Now

Welcome to First Exit in New Jersey!

I am Stacey Morrison, a veteran of real estate sales in Hoboken, NJ. This blog is a straight-up discussion of real estate here from a Realtor's professional point of view.

Please feel free to write me with questions or comments. :)