There is an age-old question when it comes to real estate: Is it better to rent or to own? The simple answer is that there is no simple answer. Each person and family finds themselves in unique financial, work, and housing situations. However, in our current marketplace, there is most definitely a significant portion of the population that find themselves wanting to buy but feeling that they are not able to do so. For that group of people, the idea of home ownership seems like a dream too far away to realize and too painful to think about.
As the real estate market has gone south in many parts of the country, the financial side of real estate has followed suit. That means that lots of Americans who would have and could have gotten financing back in the height of the market are simply not able to do so right now. Many would say thats a good and needed correction to the marketplace. There are some, though, who would quickly point out that the lending industry has become too tight in their practices. In other words, there is a large sentiment that the mortgage banks have gone too far in trying to right the ship.
As banks took bigger and bigger hits as a result of the mortgage meltdown, they simply cranked down more tightly on their qualification requirements. The problem that creates is that banks need to lend money in order to be profitable and survive. By reducing the number of loans made, the banks decreased their potential losses from bad loans, but they also vastly reduced their income from the good ones. Guess what banks typically use that income to do? Yep, thats right.they make additional mortgage loans. So, banks backed themselves into a corner where they couldnt raise additional funds to lend so that they could get back onto the right track with their revenues.
None of that is really important our our friend, the renter. The results, however, are drastic. Even those with solid credit history, well-paying jobs, and stable lifestyle are finding the credit industry to be a challenge. It is my strong belief that the lack of financing availability is leading to the majority of our continued slow housing market.
The real question here is What can we do about it? For starters, any potential buyers who are thinking of venturing into home ownership should most definitely contact a well respected and broad based lender. If you dont know one in your area, please consult the Realtor or Agent that you trust. They will always have solid contacts within the lending industry. Also, dont feel like you have to tie yourself to the yes or no answer that you get from that first lender. Different mortgage brokers have access to different pools of money that come with unique qualification guidelines.
If you still are having an issue, work on it. Credit is not a now or never proposition. There are many things that can be done to fix credit issues in a relatively short period of time, but you must be in contact with a professional who is well-versed in credit repair. Im continually amazed at the number of clients we have who come in the door that have been told no only for me to find out that they need to pay a $200 credit card bill in order to raise their score enough to qualify.
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