The mortgage business continues to make headlines and many of you are asking if it makes any difference to you as a homeowner, landlord, tenant or investor. Many of us play multiple roles in our real estate business dealings - owning more than one home, leasing commercial space, looking for an investment opportunity. The truth as we see it, is that the mortgage meltdown is continuing. Countrywide is the nation's largest overall residential funder.....but is also the biggest subprime orignator as well. Today Countrywide borrowed $11.5 billion to fund operations - which just cannot be a good thing. Countrywide has had a large presence in north Texas due to strong local representatives, but very little subprime business in our communities.
Many financial analysts believe that the subprime squeeze, where some buyers may now be ineligible for a loan or for as large a loan, may cause some valuations to come down at a time when interest rates remain historically low - which creates the perfect set of circumstances for solid buyers! The Mortgage Banker's Association reports that buyers with credit scores above 620 and 10% down can still get a desirable loan, funded quickly. Less qualified borrowers can also find funding, but the interest rates have increased on those loans - which follows the solid economic principle of increased risk = increased return. Nothing unusual or notable in that formula. If we all step back and ignore the hysteria, there is some good resulting from the tightening of loan criteria for mortgages, and our wonderful north Texas communities will continue to be highly desirable places to live!