The Credit Crunch from the Other Side of the Desk

I’ve written a piece as a guest-writer for The Front Steps, one of the better blogs on SF Real Estate.

After talking to loan officers and loan brokers for several weeks about the lending environment, here are the takeaways:

  • Have “perfect everything”:  high credit score, secure job, money in the bank and documentation to prove it all.
  • Figure you’ll be putting down a minimum of 20% as downpayment.
  • For the best long-term rates, to to a retail bank that you have a relationship with.

The complete article is here.

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Maybe it’s time to buy that first house….

That’s what New York Times journalist Ron Lieber discusses in Saturday’s Business Section.  You can find a copy of the article here.  Of course, nobody really knows where the real estate market is headed but Lieber suggests that now could be a good time to buy.  Here are a few of the takeaways:

  • First-time home-buyers presumably have the down-payment sitting in the bank, so they can benefit from the drop in home values without having to worry about selling their own home in a depressed market to raise the downpayment.
  • Mortgage interest rates are currently pretty low by historical standards and could go lower if the federal government decides to try to drive them lower.  If you can lock in a low rate for 30 years, that seems pretty smart.
  • The best deals may be in “new” housing, where developers are desperate to get out from under bloated inventories.  Those inventories, however, are falling as construction of new projects has come to a halt.  With winter being a traditionally slow time to move houses, now may be a particularly good time to buy.

Along these lines, a loan officer recently told me that he’d heard of a downtown high-rise condo that was listed for $1.1 million and was sold by the developer for $770,000 — just enough to pay off the loan amount attributable to the unit.

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