October 22, 2008
Need a loan? Don't despair. If your credit standing is excellent, it shouldn't be a problem. Just make sure you have something to put down before shopping for that loan.
"Having money to lend is not the problem. It's the type of customer that's the problem," said Steve Beecham of Hometown Mortgage in Alpharetta.
Fannie Mae or Freddie Mac has money to lend through FHA for a bit above 3 percent, if you meet the requirements and bring 5 percent down. Investor loans through Fannie Mae can be had for 20 percent down.
"Where we are running into issues is where we don't have hardly any stated income loans," he said.
A jumbo loan – 30-year fixed, for more than $400,000 – can be found, but Beecham said at 8 percent interest rate, there aren't any takers. Most jumbo loans available now that are approved are ARMs (adjustable rate mortgages), in the 5.75 percent range with 20 percent down.
"A lot of people buying houses in Milton were doing 10 percent down now have to do 20," he said.
And none can be stated income loans.
Gerald Lewis, who has started three community banks and is working on his fourth with NOA Bank (in organization) in Duluth, said banks are returning to traditional lending practices. Money is available to loan.
"To say that there is none would be inaccurate. To say less than six months ago, is more accurate," Lewis said. "Certainly many banks have taken a long, hard look at their credit granting standards."
To some degree, he said there has been a lessening of liquidity.
"They're going back to standards that are a little more traditional instead of the high flying things that go the larger banks, especially, in trouble," he said.
"This is a good time for all of us to take a good look about what we have been doing and the excesses that we have bee living ... while the economy was booming," Lewis said.
Beecham said, "If a guy is going to buy a $2 million house and going to put 30 percent down, we've got money; guy's going to by a $400,000 house, put down 5 percent, we've got money for him."
The reality is a homeowner selling a house three years ago at a high market price bought a new home at a high market price.
"The problem is that you don't want to sell low, you think you're going to sell high. Every king lives in a castle," he said. "All want to get the most."
Today, a homeowner will sell a home at a discount price, but his next home will be bought at a discount.
"The houses are selling if the people price them right," Beecham said.
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