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Long Beach Housing Market

Creative financing in this day and age
February 24th, 2009 7:39 AM
I spent some time this past week with an agent from the Seattle area who is considering a move to Southern California.  We talked about the differences in our markets and there really aren't many.  They have all the same issues there we have, although their market has started some rebound.  More buyers looking, more sellers being realistic and property actually being sold or at least making it to escrow.  He did tell me that one of the things they had to do to 'unstick' the market was get creative with financing.  In this day and age of property getting harder and harder to finance and approvals getting harder and harder to get, we need to be careful what we can do and say to Buyers.  It wasn't long ago that a credit score of 580 would get you a subprime loan, and if your score was 680 or higher you were in good shape.  A 720 score could get you anything you wanted.  Today if your score is not in the 700's you need to rethink your ability to buy, unless you have a huge downpayment.  One thing they discovered in the Seattle area was that people are trying to get the rate down as low as possible.  And why not, if your loan is a 30 year fixed that rate will be with you for a long time.  Although the payment may only be a few dollars less a month and it may not help you qualify for much more house, over the 30 year period it's allot of money, no matter how you look at it.  So what the Agents and lenders are doing in that market is encouraging Sellers to contribute to a 'rate buy-down' for the buyer.  In this market most sellers are paying all or a portion of the buyers closing costs, why not put some of that money to great use and help the Buyer buy the rate down to the 4.5 they want it to be!  It makes sense for everybody.  The seller is putting out the money anyway, the buyer needs and/or wants a better rate and and everybody's goals get met.  The lender doesn't care as long as the buy down is paid for.  Everybody wins in this scenario.  If you are on the fence about a purchase, I think this is worth a try.  It was common in the last downturn, it's time to bring the practice back.  If you aren't sure how this works, give me a call and I'll be happy to go through it with you.

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Posted by Heather Burke & Sarah Ireland on February 24th, 2009 7:39 AMPost a Comment

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