Yes… We are still here! The market turmoil has created some casualties in big lending institutions – we have lost a few on our list!!! Our business remains in good health as the market changes. Buyers and sellers have changed considerably in the last year. Sellers are becoming frustrated and a little fearful ( Thankyou media!!!) and sometimes are in denial. Since we had such a run-up in prices over the last few years, the resulting correction was inevitable. The correction in the market as well the re-assessment of risk in the mortgage market, will actually help the market in the long run. Unfortunately, there are many who have got caught in the middle who will suffer greatly in the short run!!! Buyers are having a harder time financing homes with some of the more aggressive programs, such as high-leverage loans, option ARMS, etc. Programs are still out there but take a little longer to find, and guidelines have tightened considerably. Spec builders have been hard hit in particular and profits have dried up or even disappeared. The good news is that there are still loans available if they are willing to move into their spec homes for awhile. One option is to refinance into an option ARM. Option ARMS allow a minimum payment option every month that is usually around half of a regular 30 year amortizing loan payment, thus allowing a builder to have less cash going out each month. This way they are able to ‘weather’ the storm and not lose property and or their credit!!! The flip side of this is that these loans can negatively amortize (if you make minimum payments), so the loan balance can grow substantially. These loans usually offer up to 4 different payment options on every mortgage statement: A) Minimum payment , B) Interest only payment, C) Fully amortizing 30 year (principle & interest), and D) a 15 year amortizing payment. There also is another choice of making one of these payments plus an additional amount that you choose in order to have complete control of your equity. They are adjustable loans and can adjust monthly or have different periods of time that are fixed such as 3yr, 5yr, 7yr, etc. They are generally not well understood, and require a more financial savvy borrower (or loan officer who will explain fully how they work).
The flip side of the pain that some sellers are going through is the buying opportunities that abound now. There are so many great deals out there for a buyer who understands the market. Many buyers have been sitting on the fence for awhile, wary of falling prices and everything else the media shoves in our face! For the savvy buyer this is a fantastic time for deals, because they understand the real estate market has cycles, and buying after the market corrections leads to great profits. Real estate is and always has been a long-term investment. It may be a few years before we have another surge in prices but it’s coming, and there are some gems to be had right now.
