During the last ten years mortgage programs have increased exponentially in order to attract more buyers. Requirements to obtain a loan went from 20% to 0% down payment, in some cases, one could get a loan 25% higher than the property's appraised value!
No doc, lite doc, reduced doc and full doc were the various levels of required income documentation. With the current market conditions, lenders have or will cancel all but full documentation loans resulting in a reduction of the number of loans granted to consumers. Less loans made means less properties sold or refinanced leading to an increase in available properties on the market, in other words declining market valuation.
What can you do?
1. Buyer: this is a dream period if you can secure a mortgage.
2. Seller: if you can afford it, hold until the market settles, it may take up 2009 for this to happen. If you must sell, get the best deal available, do not panic.
The resulting credit crunch will extend to corporations such hedge funds, developers and other passthrough companies, i.e. those entities that rely on borrowed money to operate!
Send us your questions and comments, we are here to assist you, seven days a week.
Home Value
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