If you believe to the news media, you would think that the financial crisis banks and investment houses have been experiencing, there is no money left to lend for mortgages. This simply is not true.
In the past several years, guidelines were loosened to the point that if an applicant was breathing, they could get a loan. These loans were bundled into mortgage securities and sold and resold into the secondary market. With real estate values increasing at a rapid pace, investors worldwide purchased these securities and believed that there was very little risk, as the properties were gaining value. Loans were made to unqualified buyers and to speculative purchasers who believed they could flip the property in a short amount of time and make a quick profit.
What is happening is that the secondary market - Fannie Mae, Ginnie Mae, Freddie Mac and the many investment houses who purchase and resell mortgages, are tightening their guidelines back to basic mortgage lending - making sure the applicant is qualified for the loan. Does the applicant have a good credit history? Does the applicant have enough income to repay the loan? Does the applicant have money set aside in reserves in case of an emergency to repay the debt?
There is still money available to qualified purchasers, whether they are purchasing their primary, secondary or an investment property. Large financial institutions have capital to lend. However, they have gone back to the basics making sure that the applicant is qualified. Interest rates are still at a historical low and there are numerous products available to suit an individual’s financial needs. With large inventories both on the Island and off the Island, today’s purchaser is able to find the perfect property to meet their needs and can find the mortgage product that will meet their financial goals. This is the time to purchase real estate.
