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Getting the Right Summit NJ High End Real Estate Property During The Subprime Crisis

By
Real Estate Agent with Kristin Balsley

If you've been shopping for the right Summit NJ real estate property to fit your needs, you may be concerned about the collapse of the subprime lending industry. This can especially be a concern if you're shopping for real estate with a higher price tag. Should you really be concerned, though?

The subprime mortgage crisis initially came to light in July of 2007 as rising interest rates made adjustable rate mortgages wholly unaffordable to the many borrowers who had them. When that was combined with a sharp decrease in property values across the country, lots of homeowners simply couldn't measure up to their financial commitments, and lenders were left without an avenue of retreat.

Because of the subprime crisis, lenders had to tighten lending regulations that before the subprime crisis, were quite lax. As a result, every fringe of the real estate market began to feel the bite. Nowhere is this truer than the Summit NJ real estate market - particularly the higher end properties.

For most buyers, in order to get a loan on a property that costs more than $500,000, a jumbo loan is the only path. Because jumbo loans (anything more than $417,000) aren't guaranteed by any of the government sponsored agencies, lenders are far less willing to take the risk that you'll be able to pay that amount back. At one time, investors snatched those loans as quickly as they could, but in the wake of the subprime crisis, investors want little to do with loans like those, and the bank has keep the loans - which leads to higher rates and more regulations.

The Bottom Line

If you are shopping for a Summit NJ real estate property that will require a jumbo loan, you're not completely out of luck. The numbers are changing, and the subprime crisis does seem to be fading a bit. While many lending companies have eliminated their subprime units, jumbo loans are still available to borrowers who qualify. Here are a few tips that might help you get into the Summit NJ real estate property of your dreams with a jumbo loan:

*      If possible, have a sizeable downpayment ready. While most lenders will make a jumbo loan if you have a 20% downpayment, some will now require you to have 25% of the property's value on hand.

*      Try to work with a lending institution you have some history with. Banks and mortgage brokers who you've worked with before are far more willing to consider a jumbo loan if you have a strong repayment history with them. They'll still want to carefully investigate your income and assets, but you have a greater overall chance of being approved if you have a past working relationship.

*      Look closely at the things lenders will be considering before you ever apply for the loan. Simple things like high credit limits on your credit cards or overdraft privileges can be huge red flags to lenders.

The subprime crisis doesn't have to spell disaster if you're looking at the Summit NJ real estate properties that run more than $500,000. Contact Kristin Balsley today for help in  finding the right home and the right loan!

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