If you’re in the market for a home these days, you might have a tough time trying to figure out whether it’s a buyers or a sellers market. Homeowners looking to sell their homes are having to drop their prices, but buyers are having a tough time getting even the smallest loans from the banks.
Even people with near perfect credit and enough cash for a 20 percent down payment are struggling these days to qualify for a suitable loan. One small ding on your credit report, even something like an unpaid bill can hurt your chances.
Where as a 20 percent down payment used to be the golden ticket to an easy loan process, times have changed. In today’s tight lending market buyers are having to cough up more than that to prove they are worthy of a loan. Add to that the ability to show cash reserves and proof positive that you are gainfully employed. Veteran realtors say this is a reaction from banks to the loosy goosy lending practices from over the last decade.
“We had in a sense you could say promiscuous lending to begin with a few years ago,” says Whit Prouty of Strong and Prouty Realty. “Now we have the crash and the lending pendulum has swung in the opposite direction.”
This, despite a 200 billion dollar infusion of cash to the banks by the Obama Administration to ease the credit crunch. Most prospective home buyers will tell you they’re not feeling it yet. Even the Federal Housing Administration which has been charged with helping more people get into homes is also tightning lending practices.
Buyers in expensive, high end markets like New York, Los Angeles and San Francisco face the additional difficulty of high prices. Most borrowing requires a jumbo loan to cover the cost of the house… and good luck getting one of those any time soon.
There might be a light at the end of the tunnel when it comes to a housing rebound, but realtors say it’s dim and distant at the moment.