The current lending environment is vastly different from what it was a decade ago. Today, tightened credit guidelines and fewer loan products have made it difficult and even impossible for some to obtain a loan.
The bursting of the U.S. housing bubble, which peaked around 2005–2006, is predominately what triggered the financial crisis. As a result, many large financial institutions collapsed, the government bailed out banks and there was a significant downturn in stock markets around the world. Additionally, the housing market has also suffered, resulting in numerous evictions, foreclosures and prolonged vacancies.
What does this mean for you?
For sellers, be prepared for a smaller pool of qualified buyers. Because of the financial crisis, tightened credit guidelines have made it difficult and even impossible for some to obtain a home loan. To sell your home quickly, sellers must be willing to not waist time by waiting for the best possible price. Work with your realtor to determine an appropriate price, and have that person help ensure that potential buyers are pre-approved.
For buyers, get pre-approved now. Today, getting credit is tougher than it has been in the past; therefore, buyers should get pre-approval now to help get into a home quicker. But keep in mind that given the current economic environment, what you qualify for today could be different tomorrow. In addition to getting pre-approved, make sure it stays current.
For those looking to refinance, communicate with your lender. Make sure you don’t do anything that could negatively affect your credit. Talk to your lender about your options and make sure your documentation is in on time.
For ARMs borrowers with ARMs scheduled to reset within the next year, contact your mortgage professional immediately. Once a loan resets, monthly payments can increase anywhere from 30 to 100 percent. Not knowing what your adjusted payment will be before it adjusts could end up being a significant financial burden, so don’t let a default or foreclosure situation sneak up on you.
For borrowers with less-than-perfect credit, see a loan expert. While getting a loan in today’s lending environment may be a challenge, mortgage and loan professionals can help you repair your credit and identify loans that may be a better option.
There is light at the end of the tunnel. While the last several years have been harsh, the economy will eventually self-correct itself. All markets, including the mortgage market, are cyclical; therefore, the economy is sure to improve. Whether you’re looking to buy, sell or refinance, it is still possible to do so today.
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With more than 23 years of mortgage and real estate experience, Billy Woolridge manages Embrace Home Loans’ Lynchburg, Va. branch, located at 103A Paulette Circle.
Founded in 1983, Embrace Home Loans is a direct lender for Fannie Mae and Freddie Mac and, approved by HUD to make FHA insured loans, approved for VA, and an issuer for Ginnie Mae. Embrace Home Loans has remained a prominent leader in the industry, having helped hundreds of thousands of individuals and their families purchase new homes, lower their monthly payments and consolidate high-interest debt since its inception.
For more information, please visit http://www.embracehomeloans.com.
