Macbeth Blog - Santa Ynez Valley Real Estate

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David and Marlene Macbeth

September 1 - October 31, 2010 Market Update

Enclosed is the update of activity for September 1, 2010 through October 31, 2010, click here to view the updates.  There were a total of  58  new listings.  There were 38 pending sales.  Of the residential sales there were 25 sales between $199,000 and $600,000, 6 sales between $601,000 and $999,999, 6 sales over $1,000,000 and no land sales.  There were 32 sale completes.  Their were 86 price decreases and no price increases.  The number of current listings are down slightly; however they are still very high at 300 listings specific to the Santa Ynez Valley.

Rates continue to fluctuate on a daily basis.  Conforming 30 year fixed rates up to $417,000 are at 4.125% at 1 point and Jumbo Conforming Loans which are loans up to $729,750 are at 4.25% at .875 point and Super Jumbo Loans are at 4.875% at .5 points for origination. The conforming 5 year ARM Interest Only is at 2.75% at .75 points, the Jumbo 5 year ARM Interest Only is at 4.125% at 1 point.  The 11th District Cost of Funds index (COFI) is down at 1.663 for the month of October.  The 6 month LIBOR rate is at 0.45; last month it was at 0.46; 12 months ago it was at 0.46.

Rates are amazing, aren't they.  At least for the time being but as we all know nothing terrific lasts forever. But when is it going to change.  That's the million dollar question.  The lending landscape has changed quite drastically over the past several years. Practices, approvals and standards that were once widely accepted have either vanished or transformed beyond the point of recognition. Many banks, which were once extremely careless with their loan underwriting techniques and approvals, have dug themselves into a significant hole that will take many years to climb out of. Promotions such as "'100% Financing"and "No Doc Loans"' were both major contributors to the financial crisis banks and consumers are facing today. Today, banks are making sure they don't make the same mistakes again, so loan underwriting standards have become more stringent than ever before.  According to a recent Federal Reserve survey, it was found that about 75% of the banks surveyed indicated they had tightened their lending standards for prime, subprime and commercial mortgages. That was up from about 60% in the previous survey. With this sharp increase in lending standards, borrowers are being turned down for real estate loans at an alarming rate.

Here are the top seven reasons banks are denying home loan requests:

1. Poor credit: The borrower may have a heavy down payment or excellent equity built-up in their house, but if their credit score is under a certain threshold, obtaining a new loan or refinance from a traditional bank is challenging. Even FHA (Federal Housing Administration) loans, which have traditionally catered to borrowers with lower FICO scores, have an average borrower credit score of 693, according to CNN Money, which is above the national average.

2. Insufficient liquidity: If the borrower doesn't have a heavy down payment (20%-30% for most banks) and strong excess liquidity, banks don't want to take the risk on funding their loan.

3. Lack of income: The borrower doesn''t have consistent proof of income for the last two to five years. Regardless of how good their credit score is or how much equity they have in their home, if they can't show the bank proof of income, loan approval will be tough. This can be a big hurdle in the loan process, particularly for retired borrowers.

4. Lying on the application: Banks have learned their lesson and are no longer putting up with borrowers stretching the truth on their applications.

5. Debt: Borrower has excessive debt and their debt-to-income ratio exceeds the bank's guidelines.

6. Unemployment: Most lenders will like to see at least two years of stable work to issue loan approval.

7. Self employment: Lenders are looking at self-employed applicants with a lot more scrutiny these days, making it very tough for these borrowers to get approved.

Obviously some of these newly structured standards are for the betterment of the industry, and our overall economy, but at the same time, home buyers across the country are realizing quickly that reputable credit and stable income aren''92t always enough in qualifying for a loan through a traditional bank.

Be sure and check out our Website and Property Search engines.  We have added Lompoc area properties to the Search through their MLS and you can find everything available throughout the County.  Looking for Short Sales and REO's. Just indicate that on the bottom field of the form and you will get the most up-to-date list available. We may be reached during the day at our office 805-688-2969, and in the evening at 805-688-2986.  Our toll-free number is 1-800-300-7977.  My cell phone is 805-689-4178 and Marlene's is 805-689-2738.  So whether you need to buy or sell, call us. We would like to show you what we can do!  In the meantime we thank you again for your loyalty and support in seeking us out when looking at properties in the Valley and for choosing in 2010 to get your information about the Santa Ynez Valley  and other areas on the beautiful Central Coast from.........

Your Real Estate Professionals Providing
Old-Fashioned Service Using Today's Technology

David Macbeth and Marlene Macbeth

Published Monday, November 15, 2010 1:33 PM by Marlene Macbeth
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