| Anyone who has been around in the last two to three | | | | only home buyers, but also home sellers, who are in a |
| years understands exactly what the market is going | | | | bind because of the lack of eligible buyers. |
| through. If you are a first time home buyer and you | | | | Though there is no clear answer in sight, there are |
| have had trouble getting mortgage loans to purchase | | | | some indications that a little bit of change may be |
| that house, then you feel the pain of many others who | | | | coming. Last week, the Federal Reserve Board |
| are in the same boat. The real estate market is in a | | | | announced that it would be cutting Federal interest |
| down time, as lenders just aren't nearly as willing to | | | | rates by a half of a point. Though this does not have a |
| give out mortgage loans as they used to. In the past, | | | | direct impact on mortgage loans, it is a pretty good |
| practically any person with a form of identification | | | | indicator of which way the market might head. By |
| could go up to a bank and get a mortgage loan. That | | | | making that decision the government is deciding that |
| has changed, though. Now, lenders are being more | | | | they need lenders to hop off of the high horse. They |
| careful with whom they lend and it doesn't look like this | | | | are interested in making it easier for banks to secure |
| is changing anytime soon. | | | | funding, so that they might pass that along to |
| Because lenders were busy handing out loans to | | | | consumers. Though the idea behind this move makes |
| people who shouldn't have had them, there became a | | | | plenty of sense, there are some indications that |
| huge problem. The borrowers, who became known as | | | | lenders might not be so quick to follow. |
| "sub prime" home buyers, quickly became a larger risk | | | | Having already been burned once by subprime lenders |
| than the bank had anticipated. Their past credit | | | | who had no business getting loans, banks have made |
| problems reared their ugly head and bit the banks | | | | widespread policy changes in regards to who is |
| squarely in the rear end. After a while, those mortgage | | | | allowed to borrow money. Even with these changes, |
| loans which the bank was so excited to hand out had | | | | they won't be giving out mortgage loans to just |
| quickly turned into a foreclosure for people with less | | | | anyone with a pen and piece of paper. On the |
| than stellar credit. They didn't have the money, desire, | | | | contrary, their rigid standards are likely to stay in place |
| or capability to make any of the payments on their | | | | for the next couple of years, regardless of what |
| brand new house. That left the lenders with only one | | | | direction the market takes. If lenders are smart, they |
| choice. They had to tighten up their standards for | | | | will never repeat their actions of giving loans to the |
| mortgage loans. | | | | unworthy. Those actions played a major role in putting |
| Making that decision was prudent and smart by the | | | | the market where it is today. |
| lenders, as they had to begin to protect themselves | | | | For those looking for relief from high interest rates, |
| from huge losses. The problem is that they have | | | | some help might be on the way, though. Since earlier |
| tightened up their regulations a bit too much. Now, | | | | this summer, mortgage loans have already seen an |
| instead of locking out those people who would be | | | | interest rate decrease. Though it has not been radical, |
| considered "risky", they are locking out everyone with | | | | the small change may be an indication that lenders are |
| a minor blemish on the credit report. In reality, banks | | | | loosening up a little bit. That is going to be absolutely |
| have no choice, though. When foreclosure occurs, they | | | | critical if the real estate market is to pick itself up off |
| take a big loss. After a while, those losses really add | | | | of the floor and return to prominence like it was on a |
| up. | | | | few short years ago. |
| The question that many mortgage loans seekers want | | | | The best advice for home buyers and mortgage loans |
| to know is whether or not this is going to stop any | | | | seekers is to keep your credit rating high and your |
| time soon? Are people going to be able to get a loan | | | | history clear. This way, you won't have any trouble |
| when they search for a new home? More importantly | | | | qualifying, no matter what moves the market makes. |
| for some folks, are interest rates going to drop to a | | | | You can't depend upon lenders to make a choice |
| level where it makes sense to refinance or take out | | | | when they are so clearly in a bind. |
| mortgage loans? This is important information for not | | | | |