Avid Mortgage Maniacs will note that it has been a while since my latest post. A little vacation and spending some time actually selling houses has kept me distracted for the last couple of weeks, but I’m back on track with thoughts on how the mortgage crisis (it’s still there) is affecting folks in Palo Alto and the surrounding communities.
To paraphrase Dirty Harry: A man’s got to keep his priorities straight
Optimists Unite!: At the recent “Reach the Summit” Economic Forum sponsored by Absolute Mortgage Bank, Partner Joel Spolin presented data on the mortgage meltdown, and showed statistics on where foreclosures and short sales are taking place. The short take is that demand for homes in the Palo Alto area is high enough that we aren’t seeing declining prices. This gives people who get in over their heads the option of selling their homes and avoiding foreclosure. We also tend to have more financially savvy homebuyers here (again due to prices) that they better understand these loans, both the upsides and downsides. You can download all the presentations here.
Yesterday, Eric Trailer, also of AMB told me that they haven’t had any of their local loans default - I’m sure that lenders like Countrywide and Bank of America could say that.
Pessimists - It’s not over yet! - Bank of America announced on Friday that it will be closing its wholesale banking operations and laying off about 3000 employees in January. Merry Christmas to you from BofA. Since the majority of mortgages are written by brokers and mortgage bankers through banks like BofA, WAMU, etc., BofA seems to be cutting off its proverbial nose to spite its face. It makes the shareholders happy though.
Blah, blah, blah . . . What does this mean for Bob and Betty Buyer who want to buy their fixer upper in Palo Alto’s Midtown and can swing the payments on a million dollar loan? Here are my thoughts:
1) Talk to a local mortgage banker or broker - they aren’t as affected by nationwide market conditions and have the ability to “shop” your loan to more potential lenders. Think nimble vs. big.
2) Be realistic about your budget, future plans (Are the kids going to Stanford or SJ State? Both are good schools, but leave different sized dents in the pocketbook). A good lender will discuss those kinds of future expenses and plan for them. There is a difference between what you can qualify for and what you should spend.
3) $1,000,000 for a house in Midtown?!? You had better rob a bank or two. You will need about $1.3M. Don’t believe me? The median home price this week in Palo Alto is over $2,200,000.
Thanks for reading.
Tags: Real estate
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