We have all heard about those who “fudge” the figures to get loans, those days may be well and truly behind us with the credit crunch, however home loan seekers are getting creative as they are facing stricter lending and government guidelines. Obviously, the troubled economy and changed real estate scene have made borrowing money much more difficult than in the past.
The latest article in the Malibu Times shows that potential purchasers who are looking at obtaining finance to buy a home and those who are refinancing are avoiding the big banks favoring smaller organizations with more personal service as well as a more tailor made product offering.
There have been some efforts from the federal government to help people get loans. This year, the Federal Housing Authority raised the maximum loan limit for Los Angeles County from $271,050 to $729,750 for a single-family residence, according to its Web site. But this does not necessarily help Malibu borrowers unless they’re making a large down payment in purchase transactions, or they owe less than $729,750 in refinance transactions.
The problem is that in Malibu as property prices are much higher than most of the US most loans are classified as Jumbo (above the conforming $417,000 level) and Super-Jumbo loans (that is loans greater than a million dollars). Because these loans are deemed a higher risk, these loans come with a higher interest rate, usually three quarters of a point more than it would be for a conforming loan.
Although these loan options are out there they are scarce. Lenders are requiring higher downpayments and strong documented income and asset documentation (which can be troublesome, particularly for the self employed).
The message therefore is that if you are out home shopping, before you even start the process, sort out your finances, tie up loose ends and pay off those odd small debts if you can and get your paperwork in order and most importantly go and get yourself a mortgage pre-approval! Only then are you ready to go shopping for a new property!
If you are interested in purchasing a property or selling a property in Malibu, Pacific Palisades or the surrounding Beverly Hills/southern California area then please contact Judy Kunisaki for professional real estate advice in the Westside Los Angeles area, on 310-317-8396 or via her online contact form on her website.
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Judy Kunisaki – CA DRE license 00963582
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[...] that financing worries are on everyones mind. Interest rates are fantastic at the moment, however qualifying can be a pain, even if you have money and good [...]