Who Can't Get a Mortgage Now?

For the average American looking for a home loan, the crisis in the subprime mortgage market may actually be good news.

Not only have home valuations come down, but interest rates are still historically low.  In addition, tightened lending standards stemming from the subprime crisis likely means fewer buyers, pushing down home prices.

The one catch is: You have to be a buyer with good credit, a low debt to income ratio, a healthy down payment, verifiable income, and looking to finance less than $417,000 (the cutoff for so-called jumbo loans).

If you're among the 10 percent of people with credit scores below 620 who need a subprime mortgage, things could get tricky.

If you're not sure whether you would qualify for a mortgage under today's tougher standards, or what your credit score might be, contact us or leave a comment below.  We'll get back to you with answers.

Fed Move Eases Panic

The Federal Reserve's recent move to encourage bank lending has helped ease some of the panic in financial markets, but the underlying problems that led to the seizing up of credit are still there - and obviously won't disappear overnight.

The credit crisis escalated last week, forcing the Fed to cut its little used discount rate - the rate it charges member banks for temporary loans - a rare move for the central bank.

The Fed's decision to cut the discount rate was designed to get banks lending again and reassure the market - and so far that appears to be working.  But for borrowers, the real move to watch is the one when the Fed takes on its more closely watched fed funds rate, a key short-term rate that influences rates on a variety of consumer loans.

Some analysts said it looks more likely now the Fed will cut this rate to keep the credit crunch from becoming a drag on economic growth when it next meets on Sept. 18, or even earlier if there's further turmoil in the credit markets.  The fed funds rate now stands at 5.25 percent.

We'd love to hear your comment.  Did the move by the Federal Reserve do ANYTHING to boost your confidence in a sagging economy?  Leave your comment below.

Latest Home Prices: More Up Than Down

The median price for a single-family home sold during the three months ending June 30 fell to $223,800, 1.5 percent below the price a year ago.

Some of the results of the survey from the National Association of Realtors were more positive.  More metro area markets - 97 of 149 - gained ground than lost.

One of the four U.S. regions, the Northeast recorded a slight price gain of 0.7 percent.  The West lost 0.4 percent, the South 1.6 percent and the Midwest 2.2 percent.

NAR predicts home prices will turn slightly positive again by spring of 2008 and rise about 2 percent that year.

Home Inspections: For New Homes Too!

There are a lot of different things that need to be inspected upon the purchase of a new home.  A common misconception by many home buyers is that simply because their home is newly constructed an inspection is unnecessary.  Nothing could be farther from the truth.  New homes require an inspection just as much as any older home, and they have a special set of considerations that need to be examined.  Home inspectors are part of the buying and selling process for the protection of the buyer and it is the buyer who is responsible for arranging their own inspection.  If sellers (or in this case, builders) are hesitant to have their home inspected or try to convince you to skip the inspection then you could have a serious concern on your hands.  What are they trying to hide?  Never buy a home (new or used) without having a full inspection performed.

Home inspectors are trained to find things that could be huge issues to the home buyer.  Typically they are concerned with the vital systems that are essential to the proper operation of the home.  Systems like plumbing pipes and fixtures, the electrical system, septic system (if there is one) are all checked for wear & tear, quality and proper installation.  The foundation needs to be examined for cracks and stress fractures.  This kind of imperfection in the home's structure can be quite dangerous and expensive to repair.  However if left unattended to it can cause huge problems later on in the home's life.

Mold is another issue altogether and most home inspectors are not properly educated in the identification of and dealing with the various kinds of mold that can be found in homes.  In fact, the best method of finding out about mold in the home is to hire a professional mold specialist.  These professionals are trained in the identification of various forms of mold and can better inform you on what kinds of mold are harmful to your health as well as the correct ways to remove the mold so it does not take hold in your home again.

Always be sure to have any home you are considering purchasing inspected.  It is the only way to ensure that your investment is a wise one and that your family is safe and protected.

Home Buyers Getting More Conservative?

Borrowers tend to fall into two camps:  Conservative buyers who are willing to pay more now for not having the risk of payments going up later, and the rest who focus almost solely on the monthly payments, asking "what is the smallest payment that will get me into a house?"

Both groups are shying away from short-term adjustable loans.

For conservative borrowers, the chance that the payment could increase beyond their comfort level is a very real and unwelcome possibility.  They prefer the certainty of a fixed-rate 15- or 30-year mortgage.

For buyers intent on getting the smallest possible monthly payment, adjustable rates are no longer automatically the ideal.  Payments can go up and the ability to refinance in a few years is not a sure thing anymore.

Which camp do you find yourself in right now?  We'd love to hear your commment below.