Geoffrey the Mortgage Guy speaks
Same old housing market road or a new one?
How many of you remember the Mortgage Meltdown and Financial Crisis that occurred around 2007? It was a perfect storm that not one product, industry or trend was 100% to blame. Yes, people pointed fingers at each other saying it was sub-prime loans, inflated home prices, low down payment programs or appraiser working too closely with lenders. Basically, everybody in the business contributed to that debacle.
I won’t forget those times as I lived them as a mortgage loan officer here in Frisco since 2002! What’s eerie is that I’m starting to see some of the same kind of practices that got everyone into trouble the last time. Are we about to see the second coming? I’m hearing nuggets like Dodd/Frank policy is loosening and stated income loans are back. Now, there’s a company that will buy your new home while you sell yours. And give you up thousands to fix up your previous home as well as your new one. This is Risky Business folks.
They’ll buy the house you want, and let you move into it, while you sell yours through them. No hassles showing your current home AND they’ll lend you up to $10k for the house you’re selling to fix it up and $10k on your new home to make the changes you want.
Things that make you go Hmmmmm…
This has so many things that could go wrong I don’t think I could fit them all here. The biggies for me are:
1. A group you do not know now owns your new primary residence. They could go bankrupt–yikes.
2. You cannot sell your original home for what you needed and now don’t qualify for the new loan.
3. If you were silly enough to borrow the $10k to improve on your new home, you just spent money on something that’s not yours yet.
4. You’ve borrowed the $10k to get your original home ready for sale and must pay the company back somehow
I haven’t even touched on the complexities of what happens if there are problems such as the appraisal not hitting value, you realize that you’re stuck with an awful Realtor you can’t fire or that they can totally have you over a barrel on financing. I cringe when I think about the possible outcomes.
Legit Ways to Buy that Next House
If you do have a client who wants to learn about other ways to qualify for a new purchase without having to sell their current home, here is a great article I posted last April.
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Frisco Mortgage Loan Officer
6801 Gaylord Parkway #202
Frisco, TX 75034