Is it possible to get financing these days?

A common theme that I am hearing when visiting people who are considering listing their homes is that they do not think that they should list their homes now.  They feel that it is pointless because “no one can get a loan”.  I believe that this thinking is totally incorrect. 

I agree that there are many news stories on the TV and in national publications (magazines and newspapers) talking about the difficulty that the lending industry is facing and the difficulty that some buyers are having getting loans.   However, obtaining loans is not a problem at all in today’s market IF AND ONLY IF the buyer can meet the big 4.  For people who bought homes prior to 2000, the big 4 are not going to be a surprise.  For people who only bought during the 2000’s or got used to the lending practices of the past decade, the big 4 may be a shock.  The big 4 are:

  • the buyer must put 20% down
  • the buyer must have good credit (I did not say great)
  • the buyer must have income to support the loan (make more than the monthly payment that is going to be due)
  • the property must appraise for what the bank is lending

These are not shocking and I would imagine that most reading this would agree with these 4 if they were a bank officer or considering seller financing themselves.  The notion of “no loans” has occurred because potential buyers got used to the following phrases (how many have you heard):

  • No money down
  • 110% financing
  • No documentation (this was always my favorite – here is $400,000 but we are not going to check anything)
  • 1% interest for the first 3 years

These policies created a lot of loans because the banks believed that the market would always go up so even if they gave a loan to a person who would default, they would be able to sell the property for a profit.  Unfortunately, this did not work out so well.  Now, there are many foreclosures and bank losses.  Lenders have gone back to safer lending standards but by no means are the standards tougher than the 1990’s.  Banks make money by lending.  Mortgage brokers and loan officers support their families by making deals happen.  There are a lot of people and companies with incentive to loan money…. but they want to lend to people meet the big 4.

Please contact us if you are interested in learning more about Punta Gorda real estate or visit our website to review neighborhoods or view available properties.

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