Our own Pat Magnell was featured in a Boston Globe article by Kimberly Blanton. Pat was asked how the latest news from Countrywide Financial Corp. might affect prices and buyers' confidence over the fall months and into next year. She observed that buyers are starting to pay attention to the mortgage crisis because of the big name lender that is now involved with solvency issues. Pat stated that many smaller lenders have closed shop over the past year +, but not until now have consumers begun to fully realize what this means to their hopes of either selling or buying a home. As a result, buyers are waiting longer to purchase in the hopes that prices will continue to drop.
In case you haven't heard, Countrywide announced that they were going to begin cutting back on their lending due to using their enormous line of credit up. What does this mean for you? You may have a tougher time getting approved for a loan due to bootstrap tightening by many of the nation's largest lenders and mortgage brokers. Per Ms. Blanton's astute observations, this will hurt those who need loans the most: first time buyers and those with little or no money to put down on a home purchase. Also feeling the pain are buyers who wish to buy expensive homes and need to obtain what are known as jumbo loans.
Buyers can expect prices to continue to drop into the fall as lenders increase interest rates and enact more lending restrictions. This is a good sign if you are already preapproved and have your finances in order. On the other hand, those wishing to pursue the American dream of buying a home may find themselves out of luck for the foreseeable future.
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