December 18th, 2008:

How is the credit crunch affecting real estate? My credit is not great but I would like to consider buying a house.

Dec 18th, 2008
by edsmith.
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The underwriting approvals are tougher today than we’ve ever seen before. On the other hand, we just closed on a property this week that only took 12 days from sales contract to closing. The lender was experienced and knew up front what the underwriters would be looking for. That made a big difference!

If you can go VA or FHA, your odds of success will be greater. Those programs allow for greater debt-to-income ratios and will permit you to close with little or no money down. The conventional markets are much tougher. Plus if you are putting less than 20% down, you will have to qualify for Mortgage Insurance (MI) in addition to your loan. MI approval can actually be worse!

Like everybody else, I want to know if now is a good time to buy?

Dec 18th, 2008
by edsmith.
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Yes, that is one of the most frequent questions that we are asked. The answer may surprise you, because it all really depends upon your personal situation.

Prices are VERY affordable today. Also, interest rates are at one of the lowest levels that we have seen in nearly 22 years in this market. In just about every other buyer’s market through recorded history, interest rates have been high. Low rates and low asking prices at the same time? Unprecedented! So, in most cases,  yes, now is an excellent time to buy!

About the only exception that we can think of would be in a case in which you may need to re-sell within the next 18 months or so. Appreciation may or may not not be sufficient to break you even in the short term. Although, in the past month we have seen several instances wherein buyers purchased at way below market values and flipped the properties for some hefty little profits.

Is a deed-in-lieu of foreclosure better on your credit score than a regular foreclosure?

Dec 18th, 2008
by edsmith.
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Not really. According to local mortgage originators, your credit score will be lowered by approximately 280 points either way. A deed-in-lieu of foreclosure can be a better option because the agreement will typically stipulate that the bank will not seek a deficiency judgment against you. That is not true of a “regular” foreclosure, in which case a judgment can be obtained against you. According to our attorney, a default judgment against you in Florida can be kept alive forup to 20 years!