Mortgage Crisis Likely to Hurt Fall Home Sales
With lenders continuing to tighten lending standards and more and more mortgage brokers predicting the end of 100-percent-financed home loans, the prospects for the Fall home-buying season look dim.
An August 18, 2007 article in The Boston Globe suggests that the current lending environment will result in some potential Massachusetts home buyers having their mortgage application rejected and other home buyers remaining on the sidelines to see if home prices decline further.
Staying on the sidelines might seem like a good idea, but for potential home buyers planning on financing 100 percent of their purchase, that could turn out to be a critical mistake. The 100-percent-financing option may not be available in three to six months.
"Facing dwindling funds from jittery mortgage investors, lenders are tightening requirements for loans, increasing interest rates, demanding larger down payments, or completely withdrawing some mortgage products. The squeeze is being keenly felt in two important segments of the home buying population: first-time buyers with little or no money to put down and those who need jumbo mortgages -- above $417,000 -- which carry higher interest rates because lenders view them as riskier."
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