Sub-prime lending and the mortgage crisis, these terms have become more familiar to most of us through recent news headlines around the nation and the world. With so many different opinions swirling around, how do you separate the sensational stories from the truth?

The truth is that the once popular easy mortgages created to assist those with less than perfect credit are now proving the downfall of the entire industry. It is speculated that over $2 million homes will fall victim to foreclosure due to a sub-prime loan issue. Creating a domino effect, other sectors like the real estate and new development markets are affected. Failed attempts to protect their assets including loan revocation and record numbers of property foreclosures have not been enough to stifle the crash of some of the largest lending firms in the country. 

It is a rarity these days to hear about lenders issuing new loans at all to anyone without near perfect credit. Let’s face it. That is a very low percentage of the population. So what are most people to do? Lenders and brokers alike are already becoming savvy at finding ways to get around the current loan freeze. There are double loans, a two-loan package including a first and second fixed-rate mortgage. The first loan is issued for the maximum amount of $417,000 and the second, with a higher rate of interest, covers the remaining loan balance. Some lenders now offer a super piggy-back loan for creditors with excellent scores, similar to the double loan except the second loan is carried by the bank for an additional $1 million or more. Sometimes a buyer may find that seller is so motivated they are willing to let them borrow the down payment amount in order to close the deal.
 

By now, most of us have read the tragic story of the Pent family of Ocala, Florida waiting with belongings packed to receive the dreaded news that their home was foreclosed on. This struck very close to home for many Marion County residents as we realized that it could happen to any one of us at any time. Through no fault of your own you could find yourself in a situation similar to the one described above. A Mortgage Bankers Association survey reported that during 2005 and 2006 over $700 billion in interest-only ARMs and over $1.10 trillion of traditional adjustable rate and hybrid mortgages. The terms of the majority of these loans include a change from a reasonable introductory fixed rate to a highly inflated changeable rate in the year 2009, spelling more trouble ahead for many homeowners.
 

If you are thinking of selling, did you know we can provide a FREE estimate of your home’s value? Interested in purchasing a home in the Marion County, Ocala, Florida area, just inquire about our new home buyer’s package filled with useful information from the escrow process, to necessary inspections and how to receive the most property value for your money. Visit www.crystalmccall.com to learn more.