From the desk of George M. Akerley
A month gone by...
Now that 2008 has arrived and we have survived another month of the "credit crisis," we have to wonder how much credence to give to the alarmists who warn of impending doom. After all, we made it this far.
Mortgage rates have fallen again - what a wonderful time to be a first-time home buyer. CHFA dipped to 4.875% last week, clearly showing all of us that 100% financing still abounds. Actually, there are Bond programs throughout the United States, and they continue to thrive. We here in Connecticut can be a bit parochial and proclaim ours to be the best, of course.
Certainly, new risk-based pricing instituted by Fannie Mae and Freddie Mac have impacted our borrowing public, particularly those with credit scores below 680. It seems like you need excellent credit to buy a house these days.
Is that really the case? Consider FHA financing. The minimum credit score for automated underwriting is 575. Unlike conforming loans, there are no adjustments for scores below 680; rates in the 5 to 6 per cent range will not cost a borrower additional points for a low credit score.
Is there a requirement that these borrowers be fiscally responsible? Yes, of course that is true - but isn't that what we all originally preached years ago? There is never a bad time to take care of credit issues. Lenders will definitely be more conservative in a difficult period, and buyers (and sellers) need to be more aware of that and become informed about how to correct some of the misdeeds of the past.
Buyers may still have some reluctance, much of it owing to the doom and gloom naysayers (who would have us believe that the sky truly is falling). Well, let's say goodbye to Chicken Little and move forward with confidence.
As I speak with professionals in the real estate marketplace and with borrowers and potential borrowers, I find that there is enthusiasm about the reduced rates and opportunities to purchase at reduced prices.
As February dawns, I will continue to raise up my flag of hope. Be encouraged, keep your eyes open for opportunities to excel and to prosper, and maintain your desire to educate and assist those most in need of your services - the buying and borrowing public.
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