Fed Cut and other issues...

Recently, while listening to Fresh Air I heard Gretchen Morgenson, a financial reporter and business columnist, speaking about the mortgage crisis and how we got here. The most important factor was this: Lending Institutions went away from tighter lending guide lines and gravitated towards riskier loans which meant higher rates of return. Now we are seeing the fallout from those very risky lending practices. Borrowers are defaulting. Now we see the flip side of the coin where there is more supply and falling prices. Primary causes of this are:

1. More Foreclosures on the market and

2. Fewer buyers because of tightening lending standards.

We've come full circle. and are now in a Buyer's market (sorry Sellers). Mrs. Morgenson goes into great detail about the mechanisms behind this, but one pearl of information was this:
Each housing market is different and you should be aware of local market conditions when considering a purchase. Who better to inform you than a trained professional, someone versed in the current market condtions, a Realtor!

Mrs. Morgenson also addressed the the recent action by the Fed cut to the interest rate. (Since this broadcast they dropped it another 3/4 of a point) With these cuts you'd expect interest rates on houses to drop, but they haven't dropped as much as they normally would. Why is this happening? She says that it is because lending institutions are trying their best to cover the losses from the bad loans they put out. Unfortunately, the loser in this scenario are the Borrowers out there. They are being used to cover the risky lending that went over the past few years.

Many people ask me when is the time to buy? I would say this: Now is a very good time because there is great selection and lower prices. Additionally the interest rates are low and should drop a bit lower.
Also we are now seeing the investors come out of the woodwork, a good indicator the market might be bottoming out...

So if you need some advice, feel free to contact me:

mobile: 707-616-3456

email: andy@azalearealty.com


If you'd like to browse the MLS for homes for sale click this link :

First Time Home Buyer's Questions?

I often am asked questions by people who are first time home buyers about the home buying process. In this post, I will answer some of the most commonly asked questions. Please be advised that I will update this blog entry from time to time, so check back!

Q: I'm looking to buy a home, what should I do first?
A: The first thing that you should do, before even looking for a home is contact a lender (Either a mortgage broker or your bank). This is because you want to let your Realtor know how much house you can afford. You may like a house in the $350,000 range, but may only be able to comfortably afford a payment @ $250,000. That's a big difference. You wouldn't want to waste your time looking in the wrong price range.
Additionally, you can be ready to make an offer, should a house you like become available. Even in a Buyer's Market, you could lose out on a house if you are not already pre-approved with a lender. If there are competing offers, a seller is more likely to accept an offer from a buyer that has been pre-approved with a lender and provides a letter from the lender stating that.

Q: When am I committed to buying a house?A: You should be committed to buying a house when you make the offer! However, there is a possibility that you find out about a condition during you inspection time frame that would affect your decision to purchase. There could be too much work to do to the house and the seller is not willing to negotiate, or some personal factor arises that changes your mind. In either case there is a a Buyer's Investigation Contingency in the contract. Unless otherwise specified, there are 17 days to perform inspection (investigations) and you have the right to cancel the agreement based on the findings of the inspection. The Seller would be obligated to give you back you earnest money deposit and any monies placed in escrow for the down payment.
If you REMOVE your Buyer's Investigation Contingency, you most likely will LOSE your earnest money deposit because you have defaulted on the contract.
There is a possibility that you can cancel the contract after the Buyer's Investigation Contingency has been removed and keep your deposit. There are a few ways this can happen:
1. If you make the contract contingent on a loan funding and it doesn't fund
or
2. If you are presented an additional disclosure from the seller after your release of the Buyer's Investigation Contingency. If you don't approve of the additional information you have the right to cancel the contract and it will not be considered a default.
You could conceivably cancel the contract up to the date of closing, but not without financial repercussions i.e. loss of deposit or loss of up to 3% of the purchase price. That might sting a bit!

Q: What's the difference between Pre-Qualified and Pre-Approved?
A: Pre-Qualified is when you have visited with a lender and based on the information you have provided them the lender will state that you may qualify for a loan.
Pre-Approval is when you have visited the lender and they have taken a loan application, pulled a credit report, and in many cases, verified the necessary funds to close the transaction.
Obviously, Pre-Approval is stronger that Pre-Qualification.