What Happened With the Mortgage Industry?

We have all heard about the collapse of the sub prime mortgage industry, but do we understand exactly what is involved? Certainly if you are a victim in this crisis, you may have some idea about what is going on, but few people are aware of how connected one part of our economy is to the other. The collapse of the sub prime industry has affected everyone in the housing market, buyers and sellers, those with sub prime mortgages and those without. It has also affected contractors, real estate agents and anyone else who makes a living in the housing industry.

To simplify the problem that developed in the mortgage industry, you first need to understand that it is generally assumed that housing prices will always increase. While this is true over the long term, in the short term housing prices had risen rapidly to an artificial high. At the same time, many mortgage lenders where giving sub prime mortgages. A sub prime mortgage is one that is considered more risky that a traditional, or prime, mortgage. Sub prime mortgages went to people with problem credit, were buying a more expensive house than a traditional lender would loan, or had some other quirk that made them unattractive to a traditional lender. Many of these mortgages had an adjustable interest rate. When interest rates increased, the monthly mortgage payment increased as well. Trying to refinance became a nightmare as the bottom fell out of the housing market, and homes were appraising for much less than the amount that was owed on them. Foreclosures increased, and the cycle expanded, as other credit markets became nervous and less willing to loan money, which is one of the driving forces of our economy.

What is a Credit Crunch?

Simply put, a credit crunch is what happens when banks become less willing to lend money, or interest rates rise, making it more expensive to borrow money. A credit crunch has a trickle down effect on the economy as a whole. When money is more difficult to borrow, the economy slows down. Much of our economy is driven by credit, and a slow down in home purchasing, new home construction and auto sales can have a staggering effect on the economy as a whole. Problems that develop in one segment of the economy have a spill over effect into other areas of the economy.

How does it Affect the Consumer?

The effect of the current credit crunch on the consumer that is interested in purchasing a home can be negative. In times of a credit crunch, lenders are less likelihood to lend money, the charge higher interest rates and tighten their lending standards. With as much as 40% of the population considered to be problems borrowers, it is easy to see how the current credit crunch affects the mortgage industry.

Interested in Buying?

If you are looking for a home, don’t let the current credit crunch scare you away. Although lenders are nervous right now, if you are considered a good risk, there is money available. How to know if you are a good risk? Check your credit reports and report any errors. Make sure that you pay your bills, both utility bills and credit card bills, before the due date. Know how much home you can comfortably afford, and do not go over that amount. For the savvy home buyer there are many benefits to the current credit crunch.

What if your credit is not so perfect? It is still possible to get a loan. Banks are going to be less interested in nontraditional loans, such as no-document loans or interest only loans. While you house shop make every effort to reduce your debt and pay your bills on time. Have 20% of the asking price available as a down payment to eliminate the need for private mortgage insurance, a move that can save you over a hundred dollars each month. If you are turned down for a loan, ask the lender what you can do to improve your credit and how long you should wait before you apply again. While the current credit crunch has tightened up the mortgage industry, it has not stopped it.



Sell and Rent Back

I have property that can have a house built on it. It is ready for construction. but my credit sucks and i have been going back and forth with the credit agencies because half of the stuff on my credit is not mine one credit place fixed it equifax so my equifax or experian report is clean and i got turned down not because of bad credit but because there wasnt enough on my credit?
no i dont want to build on it. I have a home that I live in. I only owe 3000 then it will be mine. I want to get a loan to pay it off and do some home improvements I have no desire to build on this land. But its well worth 25,000 to 30,000 and I am looking to borrow about 20,000 after I finish my home improvements im going to use what is left towards paying back the loan.

Rent Back

Many properties have repossessed this year. Due to recession, there has been an increase in home repossession. According to a survey, there were nearly 19,000 properties that were repossessed in the first half of 2008. It is not easy to digest who have lost their houses. If you are planning to buy your dream home at a reasonable price, you can look for those repossessed properties which are now available for auction, at a lesser price. If you would have purchased a new home you would have paid 50 percent more but if you buy the same house through auction you will pay half the amount. In the past three years there has been an increase in the percentage of repossessed properties that are auctioned by over 300 per cent. In numbers the repossessed properties that were auctioned were nearly 3,102 in the first half of 2008 from 800 in the first half of 2005.

A survey from the Royal Institute of Chartered Surveyors tells that the properties that were sold easily through auction over the past three years are going through a bad phase due to credit crunch. But there is a plus point with less competition in auction you can bargain for the property at a price you wish to buy. Many bankers and lenders sell repossessed properties on a single day itself because they want to receive their amount and so they don’t wait for achieving a higher price. Due to this many properties are sold at a low price which is enabling investors to get some excellent deals. Even newly build flats are being sold at huge discounts. If you buy a property at auction you can save as much as half the value of the property. But remember before you step into the auction room do your homework well.

See to it that you auction the property at a price that you can afford, because if you raise your hand once you have to buy the property. The timescale that is involved in a property auction is much tighter when compared to real estate agent. If you’re planning to buy a property through auction see to it that your finances are in place, as there is limited time frame. You have to make 10 percent of the purchase price on the day of auction and the rest within 28 days. So contact a lender in advance who will help you out. Many lenders will not be able to process the mortgage application in such a limited period of time. So it would be better if you take guidance of a good broker. Remember to inspect the property properly before going for a bid. Some auction properties have legal minefields like bad titles of ownership. So try to spot it in advance. On the day of the bid you should have 10 per cent of your maximum bid, solicitor’s bid, two forms of identification and auction catalogue. If you don’t carry these don’t go for a bid.



Quick House Sale

Nowadays, one can easily avail large amount of money by placing collateral against the loan amount. There are many lenders that offer secured loans. But the only drawback is the time taken for the loan approval. Secured loans take weeks to get approved and sometimes even months. So what if you need large amount of money within short period of time? The solution is fast secured loans. Fast secured loans are also type of secured loans, the only difference being the difference in time taken for disbursal of loan amount.

Fast secured loans as the name signifies are secured loans. You need to place collateral against the loan amount in the order to avail fast secured loans. This can be any of your personal property like home, car, bank account, important documents etc. You can avail good amount of money with fast secured loans that ranges from £5000 – £75000. This amount depends upon various factors such as value of collateral, credit status of the borrower; repayment ability etc. if you want to avail an amount greater than £75000 you can do so by placing collateral of high equity. The repayment duration of fast secured loans is very flexible and ranges from 5 – 25 years. Being secured in nature fast secured loans carry very low interest rate compared to other loans.

Fast secured loans are open to both good credit borrowers and bad credit borrowers. You can enjoy the benefits of these loans even if you are suffering from bad credit status due to arrears, defaults, CCJ, bankruptcy etc. Lenders charge slightly higher interest rate from bad credit borrowers to minimize the risk factor. Poor credit borrowers can not only avail the benefits of fast secured loans but can also improve their credit score by regular payment of loan installments.

If you want to avail money within shortest possible time then you have to choose the fastest medium and that’s internet. Online application method requires minimum paperwork and time and hence the loan is approved within very short period of time. So if your needs are urgent and large amount of money is needed to fulfill them, then fast secured loan is the one tailored for you.



Quick Property Sale