It really does not matter if you are a buyer or a seller this subject has an impact on you. The buyers that have counted on 100% financing are finding that the loan they qualified for just hours ago may no longer be available. Not of any wrong doing of the buyer, the Real Estate Broker or the Seller but the simple fact the loan is no longer available to anyone. This last week we have seen several of the sub prime lenders shut their doors – they are no longer in business. Loans were not funded even though everything was in order for the transaction. Brokers, Lenders, Buyers and Sellers are all holding their breath and trying to find other means of lending. You will hear some real estate agents tell you that it is just the lenders that were in trouble for “predatory lending.” Many of the lenders that have closed their doors are in trouble for more and less that that. However, when they close their doors and the foreclosure rate hit over 13% that changed the sub prime market for almost everyone.
Some people will no longer qualify for a loan, some will still qualify but not at a price they can afford. Will this change? Of course it will, but when and how is the better question. If you are a buyer waiting on the change, I suggest you do everything possible to put yourself in the position to qualify for a better loan. If you are a seller, I suggest if you receive an offer that appears to be a sub prime loan, check the stability of the lender, be as sure as you can they will still be around on closing day.