Becoming the Wild West. Don't Go it Alone...

A quick wrap of what is taking place out there in the real estate and mortgage world right now. It's a roller coaster, to say the least. A statement of the obvious for some. But for those who are focusing on the positive news of low rates, low home prices and tax credits as this blog points out, it is also important to understand the realities we are also facing.

All the way from the individual to small and large corporations, even the federal government, everyone is scrambling for solutions. But the more solutions, bailouts and stimuli are rolled out, the more confusion they cause. Those ready to finally take action are questioning their decisions with each new headline.

Yesterday, clients of mine were headed to a closing on a home they had waited for a long time. They originally wrote the offer on a short-sale property in mid-October, 2008. The offer was finally accepted the first week of February but the sellers insisted on closing at the end of the following week, a very fast closing. On closing day, the sellers informed all parties that it was now too fast for them and they needed until the end of the month. Yesterday was the new closing date. We were informed first thing in the morning that the sellers side had filed papers in court to halt the sale and they were seeking to cancel the sheriff's sale and reinstate their mortgage.

After a full day of banter and saber rattling between agents, closers, bank reps and attorneys, the closing went through shortly before 5:00 PM.

It turns out, the sellers and the bank holding their mortgage were concerned that they might be taking an unnecessary loss by proceeding with the short sale when new details are coming out in a week on the new stimulus bill. So they were trying to sabotage the closing.

If I have said it before, I will say it again, NO ONE can afford to go into a real estate transaction in this market without proper representation. The buyer's agent on this purchase saved it from falling apart by knowing the law, knowing what to say and to whom to say it.

Certainly people are trying to save money on the sale of a home by selling For Sale by Owner when they are underwater. Buyers perceive they may save a few bucks if they make an offer directly to the seller and cut real estate commissions. Investors now seeing higher financing costs are paying cash and cutting corners on necessities like title insurance. It is only a matter of time until these savings turn into nightmares.

It is no different in getting mortgage advice. Though it used to be rare to see guideline changes more than a few times a year, this market is bringing change at an alarming rate. Numerous announcements are sent daily announcing sweeping changes taking effect immediately or within days. Those dragging their feet waiting for lower rates are missing the point that appraisal values and changing guidelines may make a drop in rate worthless if they are no longer qualified for the loan.

Bloomberg published a great article about the realities in the mortgage world this week. Even for well qualified borrowers, it can be difficult to get financing right now as banks try to write only the best loans and restore investor confidence in their institutions:

Low Mortgage Rates a Mirage as Fees Climb, Eligibility Tightens

It is going to take a while, to say the least, for this crisis to calm down. We believe things will get worse before they get better. So be sure to have the right advisors around you to help protect you and resist the urge to be penny wise, pound foolish.

By Ronny Loew - Ronny is the Next Home Specialist with MN Home Loan Partners. Whether you are moving up, downsizing, relocating, keeping your home as an investment to buy a new primary residence or refinancing, Ronny has specific strategies to make it easy and a financial win. He can be reached at 952-808-2815 or rloew@houseloan.com