100% financing is gone

On April 1, 2007 I received a couple of emails from lenders that I've worked with in the past. One said that 100% financing won't be happening any more. The other said, "don't believe what you've heard, we still do 100% financing".

Well now it's time to pay the piper. Those mortgage brokers that did 100% financing are now finding that they can't close because the underwriter and/or the investor (the person with the money) changed their minds in the middle of the month and require a lot more documentation and investigation, which causes the home purchase to not close when it's scheduled. I suspect that mortgage brokers are quickly going to realize that 100% isn't worth their time any more.

How does that affect you? Well there are hundreds of homes in Firelight that attract buyers who want to do a 100% loan (usually in the form of an 80/20 loan). If you get an offer to buy your home from someone like that, I'd be REAL careful and expect that if it ever gets to closing that it won't be on time. This can seriously mess up your purchase of the next home. I'm advising clients not to accept offers where the buyer is financing 100% of the loan. It's just not worth the risk and stress.

This of course means that it'll take longer for your home to sell, and that leads to more homes on the market (i.e. more competition), which leads to lower home prices.

In other words, thanks to all of the recent foreclosures, the real estate market will--in my opinion--suffer for the rest of the year if not longer.