The credit crunch and you
An ask the agent question about mortgages in today's credit crunch environment:
"How does the current credit crunch really affect me and can I still get a mortgage or any kind of loan anymore?"
The short answer is yes but of course, there is more to the story. Rates are slightly higher but still very attractive. And you will have to provide documentation to demonstrate that you can pay back your loan.
The 10 year US Treasury bond and 30 year fixed mortgage rates have a historical spread of about 1.6% but because of the credit crunch environment, that spread has widened to about 2.6%. The banks need the additional profit to cover the losses they made from the bad loans they made in previous years. So the good borrowers of today will be paying for the mistakes made in the past. The good news is that the rate on a 10 year is pretty low and that mortgage rates are still hovering in the low 6% range.
Bank of America introduced the No Fee Mortgage Plus about a year ago and it has been a very popular program. The difference today is that instead of only putting 5% down, you now have to put 10% down to qualify for the program. If you don't have 10% to put down, don't despair because there are many other programs that require less down payment.
But a down payment is necessary. The down payment assistance programs from Nehemiah and Ameridream are toast. They will be expiring on September 30th as part of the housing bailout bill passed by Congress. I wouldn't be surprised to see both reinvent themselves and offer an advance loan to you based on the new $7500 tax credit which is part of the same housing bill. But please don't be fooled, the tax credit has to be paid back in installments over the next 15 years or when you sell the home. You may as well go to a payday lender charging 30% interest rates if you desperately need to borrow a down payment and my best advice is to rent and not buy a home until you can save up the down payment necessary.
If you want real answers about mortgage loans today, contact Keri Pries at Bank of America, call her at 843.810.2780 and or click here to prequalify online for a loan. Tell her I sent you, she is one of the best mortgage lenders in today's Charleston real estate market.
GOOD NEWS UPDATE: I just got confirmation that we are getting our new car loan from Bank of America for my wife's new Mini Cooper at a very attractive rate. You know I'll post some pictures as soon as we take delivery and we're hoping it comes in over the weekend. Ours will be red with a white sunroof and white racing stripes.