ok, I have your attention.
Unfortunately, or fortunately, depending on your view of the problem with the credit crisis, 100% is not back. Phoenix AZ real estate is still in a decline and lenders still do not want to lend until either prices stabilize or to the most credit worthy buyer with large down payments. As a result, 100% financing has not made a comeback. It is not even on the board for discussion.
However, I have what you might call radical suggestion that may get the Phoenix AZ real estate market moving again.
Foremost, I don’t believe lowering interest rates will help. Lowering interest rates has not help so far. Let’s face it, interest rates are at historical lows.
For the vast majority of borrowers (not companies) lowering interest rates have little significant impact on a monthly payment. Yes, even small interest rate reductions help, but rarely will saving $50 bucks a month make or brake a purchase decision. Especially with price reductions as much, and perceived real estate opportunities (great deals), most , and I do say, most people are not affected.
The problem is that buyers are required to have much larger down payment requirements. Large down payment requirements mean cash. Bottom line, people do not have cash. If they do, they are fearful to part with sums like 20% down payments in a Phoenix AZ real estate market, stock market, job market and economy with so much uncertainty.
So what can the FED do to stimulate housing,which most people be the lifeline to get the real estate market stabilized and move towards a recovery?
Here’s is my suggestion. Bring back 100% financing.
If we had 100% financing, I believe there would be a large number of buyers get off the sidelines and start making offers. There might even be a run on bank owned properties which are (generally) the best deals in town. A reduction in bank owned real estate (REO) is the first and biggest step towards stabilizing real estate prices.
In order for banks to lend at 100% they would need guarantees of these loans from the FED. Sounds crazy, maybe! or, not really.’ The insured 100% financing loans would be at such low price levels with only qualified buyers.
Here’s a thought, only allow 100$ financing for bank owned real estate. The effect would be strengthening bank balance sheets by lowering inventory and stabilizing housing making it safer for banks to lend.
And really, how much risk is 100% loans at low fixed mortgage rates on bank owned homes? maybe a lot, maybe very little. That is for the experts to decide. But, the losses may likely be less then just giving more than $800 Billion directly to the banks who seem unwilling to lend.
Let me know what you think?
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Copyright © James Wexler *Bring back 100% financing !*
If you are investing in Scottsdale AZ real estate or Phoenix AZ real estate, make sure you work with a real estate broker who knows the Phoenix bank owned real estate market and the Phoenix AZ foreclosure market.
Call 480.221.8080 to find out more about Phoenix AZ Short Sales and Scottsdale AZ short Sales
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