Watched the evening news lately? The mortgage market is crashing due to what is being called a ‘credit crunch.” Less than perfect loans called “sub-prime loans” have default rates too high and most of these loans are held by mutual funds. When these funds post losses, investors pull their money out, causing the funds to have a cash shortage. Well, mutual funds and Wall Street are big mortgage buyers. When a mortgage company makes a loan they pool that loan with many others and sell the loans to investors on Wall Street. These investors, who are taking losses in the mutual funds, are now spooked about buying additional loans from lenders. This, in turn, causes lenders to tighten their guidelines on tough credit borrowers and on those who cannot fully document their income.
Will this credit crunch go away? Yes.
Can you still get a mortgage at a great rate? Yes.
If you’re currently thinking of selling or buying and wondering how this will affect your transaction, contact us for an analysis of what types financing are best for you or your buyers. We’ll help you structure the deal properly to avoid any surprises due to the tightening loan market.
Reid Mitchell Mortgage Banker National City Mortgage Office: 817-337-8505 Cell: 214-957-2783 www.ncmc.com/reidmitchell
13 years experience, 9 years at Nat City
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