The REALTOR called me from a cruise ship. Our pre-qualified borrower--who has been waiting months for the market to fit his budget--finally decided to make the plunge and purchase a rental property in Tucson.
His FICO score is 780. The buyer is a W-2 employee with more than 16 years on the same job. The asking price for the home he wants to buy is 70% of what he figured he'd have to spend. He planned on buying with 10% down and living with mortgage insurance.
The REALTOR was on cloud nine until I told him that the borrower will have to come up with 20% down, as no MI company is willing to take the risk that the borrower won't default at some future date.
Look for Fannie and Freddy to change the underwriting rules for non-owner-occupied housing for the worse in the months to come.
No one except the American Taxpayer is foolish enough to risk their money in a market like this one. Oh! That's you? And you didn't want to risk your money either? Check with the last congressman / senator you elected to office.
I'm Mike in Tucson, your preferred Tucson, Arizona mortgage lender.
Think of me as your local expert.
Shades of things to come - there's gonna be a few changes a-blowin' in from the east!
I guess we will all have to adjust our thinking on how we will finance homes. The investor will have to put a bit more into the properties. Most likely better in the long run.
Terry,
The bar is moving higher with respect to who can play the game. I agree that's better in the long run, but many investors didn't see this coming.
Tucson Kent,
Looks like!! Thanks for being the first to comment!
Mike in Tucson
Whoever voted for this bail out crap bill needs to be replaced in this election! This is the worst scam upon the American people yet.
Investors are going to be the ones who will help the economy by buying up foreclosed properties and get that inventory moving but they are being punished for being investors. Hmmm, sounds like the Hoover and Roosevelt mentality.
We're going to see a lot of additional changes come down the pike... frankly we'll just have to deal with them and be thankful interest rates aren't in the mid teens.
As for checking with the 'representatives' that voted for this. I had a conversation with one and the Chief of Staff for the other today. Thanks to their vote I'll be doing everything I can to boot their sorry behinds off the Hill.
Jesse,
I agree, my friend. I'm looking for the list.
Katerina,
It's starting to look like we're headed for the United Socialist States of America!
Mike in Tucson
I think there will be more and more tiny homes built. That's where I'd put my money if I had any. As for the powers-that-be and their bailout plan... may their viagra be a placebo.
Susie, you crack me up. This is not surprising the downpayments will go up for investors, my question is will all the insiders have to put down 20% or will they get deals like the top dogs at Freddie and Fannie did. Will they once again profit.
I thought that you needed 30% down for an investment deal to work. Your deal sounds pretty good.
Here's the question that really boggles my mind. As real estate professionals we understand that most mortgages we see originated on home sales, have PMI or MIP to insure the banks and lenders against buyer or homeowner default. This is especially true of the mortgages that are near zero down, or low down loans. So if this is true, and it is this family of loans that is being blamed for much of the housing melt-down, how is it that bank and financial institutions are collapsing, if they were PMI/MIP insured ???
i have run into the same thing... not as many investor purchases now because of it. good or bad?
not sure
chris the implementer