3% Down Payment Plan Raising Concerns?

In their latest Housing Market Insight & Outlook report, Freddie Mac revealed that recent low down payment initiatives have raised concerns that we may be returning to the same lax mortgage qualifications that caused the housing crisis from which we are just now recovering. The report went on to explain that today’s underwriting guidelines are nothing like those that existed just prior to the housing meltdown. “Pre-crisis underwriting allowed layered risk, that is, the combination of multiple features that amplified credit risk. Low down payments often were combined with variable-payment loan structures, property-based underwriting, and questionable appraisals. These risk factors, along with the ‘irrational exuberance’ of some borrowers, led to large losses during the crisis.” What is layered risk? In the pre-crisis environment, many mortgage loans incorporated several additional features besides low down payments that multiplied the total risk of the loans such as: variable payment options, underwriting based on the property not the borrower, questionable appraisal processes. Borrower expectations were also overly optimistic at that time. Freddie Mac highlights the difference between then and now by using a table in the report: By removing the “layered risk”, we can be confident that low down payment programs will not impact the market the way mortgage underwriting impacted the market a decade ago. And the report explains: “Previous research has found that reduced down payments can increase the relative probability of homeownership among some groups by over 25 percent.” Bottom Line We believe the report’s conclusion says it all: “As long as the underwriting process bars the return of the layered risks prevalent in the pre-crisis era, lower down payments are not a cause for concern.”

Real Estate Agent In Saugus, CA

If you are looking for a real estate agent in any area of Santa Clarita, don't hesitate to contact me at anytime.  I have been in real estate since 1996 and have closed over 1,000 successful transactions.  I have grown up, went to school, worked and lived in Santa Clarita since 1982.

From home buyers to home sellers I am ready to service your needs to the highest possible level.  From buying or selling a home from $50,000 to $2,000,000, I know that all of my clients needs are different and I will do everything I can to service those needs.

Real estate can be a confusing and stressful process for many people, I am here to help with the processes and make sure we have the smoothest transaction possible all put in basic terms.

My clients not only are my clients, but become my friends, to remain your Realtor for life!

Real Estate In Santa Clarita

So I took a small break from blogging the past few months as number one the market was busy and the time wasn't there for writing everyday.

But the constant question is, "How is the real estate market?"

My answer is always, as a buyer or as a seller?

Right now, if you are buying a home in Santa Clarita, there are 731 active listings! That is up about 10%. Only 305 of those listings are priced under $500,000.  As a buyer, interest rates are still low which will keep your payments lower!

As a seller, prices are up, up, up! This is great if your home ever experienced a decrease in value or if you owed more money than what it is worth that may not be true anymore! If you would like to know the value of your home, please CLICK HERE

Either way, we still have a great real estate market in the SCV! For more information on buying or selling your home please don't hesitate to contact me directly, 661-702-4767