Don’t get Hit by the Mortgage Bus while trying to Call Bottom
February 22, 2008
Post Tags: Calling-Bottom , Hit-by-a-Bus , mortgage-lender , Tucson Real Estate Market
We have all seen a movie or program where someone is crossing a street looking one way to make sure it is safe and getting hit by a bus coming from the other direction. It is sudden, shocking, and fatal.
Maybe not a bus, maybe a van or a cab as in Joe Blacks case both.
Trying to Call Bottom
I drove up to Picacho Peak State Park the other day late in the afternoon. It was a scouting trip to see the Mexican Poppies and find out when the season peak might be if it hadn’t already happened. First they told me I was there too late in the day. The poppies were starting to close up. I should come earlier between 10:30 and 3:30 to see them at their best. Next question, which they love all the time. “When is the peak of the season.” Answer, “The season can last till April depending on rain and temperatures. The peak we never know till a couple of days after it happens.” The same is true with the local Tucson Real Estate Market. We will know bottom after it happens. This is true for everyone, those working in the industry and those waiting to buy a home when the market hits bottom.
The Mortgage Bus
While some buyers are waiting and watching to call bottom and then go out shopping and make offers they might end up being very surprised. They might find the house they want and then discover “They No Longer Qualify For A Loan“.
The mortgage qualifications are getting tighter for residential real estate. Check out “The Other Door of the Mortgage Barn About to Close“. Higher down payments are going to be required to get mortgage insurance. If you can’t get mortgage insurance you can’t get a conventional loan without at least 20% down. Much of this is going to kick in in Arizona by March 3, 2008.
The 30 year fixed interest rates are climbing again. This time it doesn’t look like they are going to be coming back down anytime soon. I’m seeing today 30 year fixed at 6.125%, just last week this rate was 5.875%.
A single percentage point represents thousands of dollars over the life of a loan. It also represents higher monthly payments.
Buyers Look Both Ways
If I were looking to by a home in Tucson or anywhere else for that matter I wouldn’t start by looking for a home. I would start by looking for a lender. Establish a good relationship with a lender and get your financial ducks in a row. Find a lender you trust and will keep you informed of changes coming in the near and eventual future. Make sure you can get a loan you can afford. Only then start looking for the home you want to purchase.
It isn’t going to do you any good if you get a house for $5,000 less than you would have a month ago if the interest rate on your loan is going to cost you $20,000 more in interest. It would compare to the days when you could buy a printer cheap but go broke buying the ink cartridges to print.
Worse, you find out the down payment you have been saving is no longer enough for you to qualify for a loan. It won’t matter how great a deal you think you can get if you can’t get a loan to purchase the home.
Don’t let your ability to purchase a home die because you didn’t look both ways.
