You may have heard but ...the interest rates dropped substantially recently on the heals of the Fannie Mae and Freddie Mac takeover by the government. This could mean substantial savings for you if you have been sitting on the fence. And it could be good news for sellers whose homes are not selling.

The other thing to know is that the mortgage requirements are getting more stringent, and it is expected that we will see even more  and tougher, standards next year. Many folks who might qualify now may not do so next year. And if the rates go up too...

Finally, you probably know that the higher mortgage limits are going to end at the end of this year for certain mortgages (e.g., FHA). This means some loans for median priced homes, say in the Carlsbad area, will then, again, become jumbo loans.

Is this YOUR opportunity to buy?

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If I can provide more information about Carlsbad and surrounding areas, or the housing market in general, or otherwise assist you in your homes search, please contact me by

phone or text at (760) 840-1360 or email me at JDowler@remax.net.

All content copyright © 2008 Jeff Dowler

Why this title? Read on - if you are selling, or (hopefully) negotiating an offer on your house, this is important information.

Sellers, it's time to be cautious!

If you are selling your home you have been a buyer before. So you know something about getting pre-approved and why this is important. And if you are an experienced seller you likely dealt with the issue of pre-approval for buyers who submitted offers on your listing.

There has been lots of hoopla in the media about the mortgage issues in recent weeks, particularly in the sub-prime market. What does this mean?

• some mortgage money is no longer available
• some lenders are in deep trouble (e.g., New Century) or can no longer lend money for folks looking for 100% or similar loans
• there are likely some buyers who will no longer qualify for a loan because they don't have a down payment due to more rigorous guidelines

Getting pre-approved as a buyer is always recommended. And as a seller you should ALWAYS ask for a pre-approval letter with an offer. Why would you accept an offer from someone that you do not know is qualified for a loan?

But given these new developments:

• it is critical that you DEMAND a pre-approval letter in order to review and accept an offer. To not do so is a huge risk, especially if the buyer is a low or no down payment buyer
• And it might make sense to be sure that the pre-approval is RECENT (if it was 3 months ago the circumstances for that buyer, given the market, may have changed and they may no longer qualify, or the program they were going to use may not exist any longer)
• You need to know if it is a reputable lender

The other concern is that an offer that has already been accepted COULD fall apart if the buyer, despite being pre-approved, can no longer obtain the loan they need due to changes in the programs that are available.

This is NOT to scare you, or to discourage you from selling, but simply to urge caution with the offers you may be receiving, and to make sure things are on the up and up. Your agent can help with this.

Keep in mind that making sure buyers are qualified and can meet the standards of the lender is a good thing. And lending money to risky buyers (poor credit, stated income, 100% in some cases), as has been done in the past, is not wise, so changes to these practices, with more rigorous standards and guidelines, is best for all concerned.

I just posted a Market Update Guest Blog which focuses on the mortgage industry and recent issues, especially in the subprime market. The next few weeks will be telling in terms of the impact this may have on some buyers (those who would have normally been looking for 100% financing).

It is helpful reading, and reprinted verbatim with the author's permission. Good article for both buyers and sellers in this housing market.

I recommend you take a look at it.

Jeff

If you are moving here from another part of the country, especially one that is not on the list of most expensive cities in the US (e.g., Boston, New York, Washington, DC), you are probably experiencing sticker shock as you start looking at homes for sale.

Even though you have most likely seen some of the articles in the newspapers or on the Internet about the realities of home prices here on the West Coast, somehow it always seems worse when you are actually searching for a home, rather than simply reading about the plight of others living in expensive areas such as ours. And while the market has changed drastically in the last couple of years, it does not mean that it is inexpensive to live here now.

There was also a recent article in the Union-Tribune entitled Locked out of the Market, which focused on the many folks living here who cannot afford to buy since their salaries are lower than that needed to buy the median priced home. Scary stuff, but not a surprise for those who live here.

Keep in mind that the median price home they used was $477,000, and it IS the median, i.e., 50% of the homes cost less. Now, while that doesn't mean there are lots of properties, or any in our area, costing $100K (except for mobile homes), there are options - in my general area there are well more than 250 properties with at least 2 bedrooms for $350K or less. Still a high price compared to places like Austin, TX, but  it does mean there are some options for people relocating here who have lived in far less expensive places - there are just trade offs, and major adjustments.

This, in no way, means that we do not have a serious housing problem, here and elsewhere, and the problem is likely to get worse unless salaries rise dramatically and there is more affordable housing created. And it's a challenge for many even to find affordable rentals. There are many people here, and elsewhere, who may never realize the dream of owning a home, even with creative financing options for first time buyers, seller concessions, price drops in some communities, and more.

So, if you are frustrated, I do understand. And coming from Boston was a shock even for me. But there are some good loan programs out there, especially for first time buyers, and with the inventory, sellers are willing to negotiate much more than in the past. Will the prices drop further? Hard to say. The changes we have seen are, in the overall picture, pretty minimal. If I can help in any way, or answer any questions about the market and the options you have, please let me know.