Balancing Act

Earlier today, I received an email from a good friend of mine, Jerry Buonnanno, Mortgage Specialist with the Andy Ross Group.

Below he looks at the real estate market from a couple of perspectives. He references Connecticut but I think this applies to most parts of the U.S.

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lot has been made recently of the declining real estate market in CT. Yes, just about every county in the state is declining at this point. Now, this can be both a good or bad thing depending on what you are trying to do. Allow me to break this down into 2 different sections. Those who are looking for a home, and those who already have a home and may look to refinance.

Those looking for a home:

This is clearly a buyer’s market. Homes are out there at great values. The key question is can you capitalize on them? This is where FHA comes into the picture. FHA still allows a borrower to finance up to 100% of the purchase. The key with FHA is your income level. Whereas in the past you could finance 100% of the purchase without proving income, now we have to prove income satisfactorily to the bank. This really becomes a problem for those who are self employed with a good CPA. We can still “State” the income, but not without putting money down. At least 10% at this point. My advice to you today is to not “over-negotiate.? You may be going back and forth with the seller trying to get them as low as possible, in the mean time the lender has taken away the program. The old saying “Here today, gone tomorrow” certainly applies to the mortgage world at this point.

Those Who Already Own:

Ride out the storm! If you can hold onto your home you should do so! There are many reason’s people look to sell there home. People look to trade up. They look to downsize. They may need to draw out there equity for one reason or another. They may also just want to refinance to get a lower monthly payment. Refinancing in a declining market is a bit tricky. What most conventional lenders are doing is imposing a mandatory 5% loan reduction for any loan considered to be in a declining market. DON’T let this scare you. This only applies to the maximum loan amount that you qualify for. So if you qualify to finance 90% of the value of your home but you only want to finance 75% you are fine. If you are looking to finance the max then we have to be creative. We can look at some lenders who do not recognize declining markets. We can also look at FHA financing which does not recognize declining markets either.

The bottom line is…DO NOT LET THE TALKING HEADS IN THE MEDIA SCRARE YOU. Talk to someone who knows what is actually going on in the market. Just like when the “dot com” bubble burst in the late 1990’s…the people who made money were the ones that bought all the way down! Don’t sit on the sidelines and let opportunities pass you buy!

As always I hope this information was useful and I look forward to speaking with you at your convenience!

Warmest Regards,

-Jerry

Gerald Buonanno

Professional Mortgage Planner

Work: 203.318.0055 x217

Cell: 203.641.2246

Fax: 203.318.0732

Email: jerry@andyrossgroup.com