Buyers Need To Be Truely Qualified

The FHA is catching up to the where the market place currently is. YOU NEED TO BE QUALIFIED TO BUY A HOME.It still surprises me when I get a new prospect and give him an initial assesment and they say that they either don't have a job right now or they have a minium wage job or no money in the bank.Right now, although you can get a loan with 3.5% down, your offer is seldom accepted anyway because there are better qualified buyers with more money to put down and therefore present less risk that they will lose their home. Agenys have a rsponsibility too to be sure their buyers can afford a particular home...recently I had a client that wanted to know what the payments would be on a particular home, after I told her , the mom which is helping her started to question how they could pay that type of payment on her daughter's income (daughter's husband does not work), after discussion, we agreed we would look at a lower price point of home. Makes me wonder how Wells Fargo preapproved her for that higher amount in the begining!The FHA will soon require a 5% minimum down. Yes, it will eliminate some buyers from the marketplace, but those buyers will have a hard time getting anything at the minimum level anyway. Buyers will also have to have a better credit score from a minimum of 580 all the way to 620. The thing we are missing though is that most banks want at least a 680 anyway, so again, the marketplace has thinned the weak out already. You need to see also that many listings specify already that they want credit reports and financial proofs. Yes, too they look at the size of the downpayment as well. THE MARKET IS ALREADY THERE!The downside to this that credit repair will start to flourish and people will once again get sucked into a scheme that produces little or nor results. We saw what happened with loan mod business in California. That business has now tanked. They are now barred by the California Department of Real Estate from taking upfront fees. Most credit repair and loan mods can actually be done individually as the techniques are fairly simple...just time consuming!The extension of the homebuyer credit for first time buyers ($8000) and buyer/sellers ($6500) will help to have a decent real estate market into the spring but again like others have said, this is just a band-aid and will cost future generations somehow. These credits in my opinion have caused price inflation that actually discourages buyers, not to mention potential appraisal issues. Imagine going to the store on black friday to get a $99 patio heater only to be disappointed and dismayed when you get to the check out that it now costs $199 because everyone wants one. I even get feedback on a Broker Price Opinion (BPO) that they don't believe me when I say the market is depressed...it still is and the financial powers are just manipulating the market to keep things from "sinking" too fast. Yes, we have price apprieciation, but it is artificial, until the economy is healthy once again.Let's all be responsible players in the real estate arena.
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Comments

  • FHA has become the new sub-prime. Fraud is everywhere right now.
  • I have been working with some REO agents in my area and being a filter to guard against these false pre approvals. I believe this helps show the AM the real deals and assure a smooth closing. I have even made a turnkey website for cross approvals.
  • You are on target.

    But the loan originators will still find a way to game the system. It remains about making money . . . no matter who gets hurt. The god of capitalism is a "small "g"" god It’s not The God.

    There's lots to clean-up and reconcile with folks who have lost their homes and need a fresh start. So far, all the administration has shown these people, is the "exit".

    If we are really going to restore the economy, it will have to be better than that.

    Clay
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