Page 11 - April 2021 Issue.indd

these loans on a gullible public. All are the days when you could borrow Houses are being purchased today
parties involved, investors, lenders, money with low credit scores. It seemed for long term enjoyment comfort
originators, and, sad to say real estate that no matter how low your scores were and satisfaction, not so much for its
buyers were convinced that real estate some lenders had a loan for you if you value going up. Today’s buyers are
values were going to continue to go up. were willing to pay the price. driving prices up with multiple off ers

Then in September 2008, the fi nancial Today’s underwriting guidelines are on desirable homes because they see
crisis hit, and the rest is history. Literally much stricter and focused on factors themselves in the home for years. If the

overnight real estate values plummeted that add risk to a lender. That is house checks off a bunch of punch list
as much as 50% or more. factors on their want list then they are
why conventional interest rates vary motivated to buy, and when they do,
Unfortunately, many of these buyers and depending on loan to value and most they see themselves and their family
their families found out the hard way importantly credit scores. The lower living in the home for a long time. If
what losing your house to foreclosure your credit score the higher the interest the value goes up while they own it is
feels like. It is a long, arduous journey rate will be.
a bonus, not like the market of early
to get back to a point where you can
Buyers and investors in the early 2000’s 2000’s when buyers were counting on
consider being a homeowner again.
were motivated to buy low now and the value going up so they could sell or

The real estate market of 2020-2021 sell high later, basically speculating on refinance their risky adjustable rate loan
is vastly different than the one that values continuing to go up. With home to a more secure fi xed rate.
crashed 13 years ago. Although interest prices going up so fast the possibility
The National Association of Realtors
rates ticked up slightly in early March, of gaining equity just by owning was a
(NAR) reported that at the end of
they are still near historic lows. But in huge reward for those buying homes.
January 2021 there were 1.04 million
today’s world qualifying for a mortgage Easy money set the table so to speak,
homes on the market. This is down 26%

is anything but “easy”. Gone are the days by allowing people to make the leap to
from January 2020 and the lowest on
of borrowing money without having to home-ownership and turn equity into
record dating back to 1982.
justify your ability to repay the funds. cash to use to purchase a nicer or bigger
Gone are the days when assets really did home in the short term. Because of this lack of inventory many
not matter. Your promise that you had houses are selling for more than asking
the money was good enough. And gone price and are going under contract in a
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