Are we really spiraling downwards as the secondary market continues hack away at every “non-conforming/Alt-A” product left (forget about subprime loans)? Will the rates on Jumbo loans continue to go up? How many more lenders will fall? These are questions that I keep hearing too often these days… There is no simple answer to these questions, however whether the answer is good or bad depends on what side of the fence you are standing on. I’m not going to go into detail in regards to how and why the walls are tumbling down on the mortgage industry. You can read about it here or here or even here. However, I wanted to address a different perspective to these events and how it can and will benefit that potential home buyer that is not sure what to do yet. We need to start to look at the positives of this market. Yes, there are positives to this market and if you are a first time home buyer waiting for that “perfect” time, well jump off that fence and call your Realtor because the market is now all yours!

The sellers are struggling. There is a huge amount of inventory, financing has become very strict, buyers that once qualified for a loan may no longer qualify, jumbo loans are priced significanlty higher than conforming rates meaning that qualification for a jumbo loan just got tighter, sellers are competing with large incentives offered by builders… the list goes on an on. People trying to sell their home right now are facing an uphill battle. The good in all this is home sellers are being forced to drop their prices. While this puts the strain on home sellers, this is opportune time for buyers. I don’t think I need to elaborate about the fence any further!

This shift of the market to favor of the home buyer has been long due. Home buyers are in a much better position to negotiate price with sellers nowadays. If the sellers have the equity they are more likely to assist you with paying your closing costs. That home that you went through in April may still be on the market and more than likely it is listed at a lower price. I have a client that listed their home at $679K in April but they just got an offer at $615K in late August, which they are going to accept. That’s phenomenal, for the buyer of course but a heavy dose of reality to the home seller. This is happening all around us right now. There are countless great deals on the market today. Homes that were selling for $450K a year ago are now selling for $380K. Although inventory was high before the walls started to fall in on the mortgage industry, people still had wishful thinking that they could get “full price” for their home. That wishful thinking got them nowhere and now the mortgage industry is going in for a full body lift. Guess what? That home owner now has to drop their price even more in order to expand their potential buyer field.

Do you see where this is going? Yes, financing has gotten stricter and we are seeing the comeback of Mortgage Insurance and the FHA loan. There is still 100% financing available under agency programs like My Community. These loans are typically capped at conforming loan amounts but hopefully we will see a change in the conforming loan limit soon! Conforming rates are going down! Yes, I said going down. Bottom line here is that now is a great time to buy because homes are getting cheaper. Don’t mope about the market. The market has done a complete 180. Just remember, it’s all perspective.

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