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A Word about Lenders and Today’s Market
After being on the market now for about 7 months and selling 13 units, we have watched various lenders change their criteria and qualifications from monthly to daily. This keeps us on our toes, and talking to a multitude of lenders on a daily basis.
The sub-prime market fallout now engages most lenders’ qualifying process, and they are dinging the first-time homebuyer who has good credit, a good job and a rock solid payment history. Normally, getting out of an adjustable rate loan into a better loan is no problem, except the people who should have never qualified for their loan in the first place will definitely not qualify now for a refinance. So they are stuck. In a nutshell, an ARM or interest only loan is still a great loan with very low payments for a qualified buyer without a lot of cash to put down.
So how are lenders dinging the first-time homebuyer? Most importantly, they are calling the entire county of Los Angeles a “depressed or declining market,” which allows lenders to require 10% down for a home purchase. As one underwriter explained, “this is what came up in my computer today, there is nothing I can do about it.”
Well, we can.
We have always maintained a philosophy of choice here at The Hudson, a choice in concessions, a choice in units, and a choice in using any lender you want. By law, you are allowed to use any lender, but in order to help you actually close on your home, with the loan you want, we now have the following requirements:
- 5% loans are still out there, and with great rates. If you want to go this route we require you to get pre-approved with Steve Fox at Wells Fargo (contact). We know he can do 5% loans with great rates, and he can close on the property. This path also gets you the cash back concessions offered by the seller.
- For a loan where you are putting 10% or more down, most lenders will do this, so it only matters in the sense that you have your lender call us immediately to qualify the property…about half the lenders out there cannot close on new subdivisions until they are 51% sold.
We have gone through the gamut of lenders saying they can do 3-5% loans, only to demoralize a buyer by changing the terms in the middle of the process- making promises they cannot keep. To help keep the lending process smooth and a positive experience for you, we will only take a unit off the market for you by following this path. If you want to try another lender with a 5% down loan, we will write up the offer after we are sure they can perform for the buyer.
Adams Hill is a wonderful and safe neighborhood. The last appraiser on the property even went as far as superseding the blanket status of “declining” and upgraded our neighborhood to “holding its value.” This allows Wells Fargo to continue giving our buyers loans with just 5% down.
As the market opens up, we will re-evaluate different lenders and see what packages they offer that best benefit our buyers. We are still selling and closing on units because the interest rates are at a historical low and these homes are priced very competitively for this market. If you have a good job and good income, there is no better time to buy a home.
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