Has Local Real Estate Financing Stabilized?

It seems that almost every day someone asks me about home financing. Often, the perception is that money is super tight and that it is really difficult to get financing these days. After a long conversation with a leading local expert in this area, I am inclined to say that loan processing and availability have come a long way in the last couple of years.

A few things have shifted. Interest rates are lower now than they were in 2007. Stated income loans have all but disappeared. The front and back ratios have tightened up a little bit, as have credit score hurdles, but not by that much. Otherwise, the money appears to be available. Interestingly, FHA insured loans are on the rise. They require relatively low down payments, come at a very modest cost, and have attractive interest rates. FICO scores of 620 are required. Additionally, there can be non-occupant co-buyers with these loans (to help with the loan approval).

Other loan types are readily available to qualified borrowers as well, but at slightly higher interest rates. Down payments of 20 to 25 percent may be required. The cost for the loans are about the same for the FHA loans and the money appears to be available.

Qualified investors hoping to pick up income properties have access to capital as well. They will need up to 25 percent down to secure the note. Rental income will be discounted to 75 percent of total income in the qualifying process. Loans for multi-unit properties can be picked up with six percent or lower interest.

Visit us at http://www.beachtime-realty.com

Tony Cordi is the owner of Beachtime Realty, serving the South Bay since 2007. He specializes in beach properties across the South Bay and Palos Verdes. Tony has helped several clients identify properties where they can add value by remodeling or developing the property.