What The Hell’s Going On With Mortgages?

firehouse.jpgAre you thinking that the mortgage industry is going up in flames based on the recent media madness?

If you have Boulder real estate, I think you’re just fine. In fact, most of us are in good shape if we have or are looking to get a reasonably conventional mortgage and we have good credit. If you bought your home to live in it, not as a short term investment, then you’ve made a smart move also.

Everybody’s got their undies in a twist over what’s going on with the “melt-down” in the mortgage industry and with the way the media likes to inflame every topic it can get it’s hands on to make a story I’m not surprised.

Even CNN this morning jumped on the exaggeration bandwagon and said that anyone looking to buy real estate should expect to pay at least 20% down if they want a loan. It’s just not so. I talk to lenders every day. Excellent lenders like Nora Ziel at Cherry Creek Mortgage and money guru like Louis Barnes at Boulder West Financial.

While some types of loans have disappeared and even some lenders have closed, it’s the non-conforming products that are causing the dilemma. Okay, it’s more complicated than that and yep, Countrywide has had to borrow a massive amount of money etc etc…

The bottom line for potential home buyers is that if you’re in the ‘safe zone’ and qualify for a typical ‘agency’ mortgage, you should be able to get a loan as easily as you could last week, last month or last year. Most lenders consider this ‘safe zone’ to be within three basic guidelines:

  1. Your credit score is 680 or above
  2. The loan to value on your new home purchase is at least 95% (you’re putting down 5% or more)
  3. You’re applying for an ‘agency’ loan such as Fannie Mae or Freddie Mac.

Here’s an excerpt from a Marketwatch article about this topic:

What is agency versus non-agency paper? Agency paper is a loan that the government-sponsored entities Fannie Mae and Freddie Mac can insure. These loans are usually fully documented, loan size below $417,000, and 20% down payment, or has mortgage-insurance policy. Non-agency loans are sub-prime, Alt-A, pay-option ARMs (adjustable-rate mortgages], home equity line of credit (the second lien on the 100% loan-to-value loans), and jumbos.

If you bought or plan to buy a home for the purposes of living in it for a reasonable number of years and a primary part of your plan is to enjoy the property as a home, the return on investment (ROI) for you must be measured by that intangible factor of personal enjoyment and shelter not just the profit potential.

If you are interested in some date regarding appreciation rates, the Office of Federal Housing Enterprise Oversight for some interesting statistics. You can narrow it down to your state and city. Look for the link at the top called ‘cities’ and compare yours with where you’re thinking about moving. Here’s the data for Cities. Just type in your city and get the run-down on their appreciation data. You don’t have to put in more than one if you don’t want to.

… AND, you can FOLLOW THE LINKS I have for you on the right side of this page to find some great information. Please see my video tour section, to see tours of Boulder real estate for sale, business profiles, neighborhood profiles, and new development profiles. I want you to find exactly what you want, and get all the info you need. Call or email me now to get straight answers, and start the process of finding the perfect solution to your real estate needs.
-Zachary Epps, full-time professional Realtor® and EcoBroker®


One Response to “What The Hell’s Going On With Mortgages?”

  1. Nora Ziel on September 18th, 2007 6:11 pm

    FHA would be a great product to keep in mind with minimum down paymnet of 3%. Another option would be one of the several options that Colorado Housing and Finance Authority (CHFA) offers with no money down. Let me know if you would like more info. Have a great day, Zachary!

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