The Lending Industry
As you know from some of my previous posts, the foreclosure market is on the rise. Some figures indicate it's risen as much as 56% over last year, in some areas.
Many of these sellers are being hit by rising interest rates - those that took the low interest adjustable rate mortgages are seeing HUGE jumps in rates right now, and when you're strapped to make your monthly payment, ANY increase in that payment is tough.
We've seen a number of lenders go out of business in the past 6 months, while many others crack down on various programs. It's nearly impossible to get a 100% loan now, unless you've got sparkling credit. Six months ago, you needed only to "fog up a mirror". Many lenders have turned away clients who would have qualified without a problem 6 months ago, because the secondary market (the place they go to sell the loans) won't work with their credit scores.
Today we found out the lending industry will no longer be offering 80/20 mortgages. That's where the lender sets you up with 2 separate mortgages, one with a higher rate, in order to finance 100% of your transaction. Most of the time these mortgages are refinanced in a year or two back into one loan, once the buyer has gained equity in the property. I'm told there are still ways to obtain 100% financing. . . . .but apparently the 80/20 mortgage is no longer one of those options.
It will be interesting to see what other changes we see in the lending industry while the real estate industry is seeing it's "correction".
Many of these sellers are being hit by rising interest rates - those that took the low interest adjustable rate mortgages are seeing HUGE jumps in rates right now, and when you're strapped to make your monthly payment, ANY increase in that payment is tough.
We've seen a number of lenders go out of business in the past 6 months, while many others crack down on various programs. It's nearly impossible to get a 100% loan now, unless you've got sparkling credit. Six months ago, you needed only to "fog up a mirror". Many lenders have turned away clients who would have qualified without a problem 6 months ago, because the secondary market (the place they go to sell the loans) won't work with their credit scores.
Today we found out the lending industry will no longer be offering 80/20 mortgages. That's where the lender sets you up with 2 separate mortgages, one with a higher rate, in order to finance 100% of your transaction. Most of the time these mortgages are refinanced in a year or two back into one loan, once the buyer has gained equity in the property. I'm told there are still ways to obtain 100% financing. . . . .but apparently the 80/20 mortgage is no longer one of those options.
It will be interesting to see what other changes we see in the lending industry while the real estate industry is seeing it's "correction".
Labels: mortgages
posted by Brittany Nigh at 7:25 PM
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