Clearwater Florida Home Mortgages – Can I still get one?

Clearwater Real Estate Mortgage Market Report

You have probably heard it is hard getting Clearwater home loans with all of the problems with sub-prime mortgages, and the tightening of lending rules, so here is an update on home mortgages this summer.

Yes, you can get a home mortgage in the Tampa area now, but it is important to understand what is going on in the home mortgage market, and to know that rates may vary widely.

Basically, the problem with home mortgages in Clearwater and around the country this year is that there is a liquidity crisis for some mortgage companies, and I am afraid antidepressants won’t work with this one…LOL. Some mortgage companies have gone out of business and many others are hurting.

Clearwater Mortgage Liquidity Market Report

To understand the mortgage liquidity crisis, it is important to understand how the home mortgage system works, so here is a brief overview:

  • When you buy a home, the bank (or mortgage company) loans you the money. The bank then sells your mortgage to an investor like Fannie Mae or Freddie Mac, in the secondary mortgage market. In the case of these two investors, they buy mortgages under $417,000 (conforming mortgages). The money your bank gets from the investor is then used to provide a mortgage to another family buying a home. Simple cycle, right?
  • Okay, now for the next step. The investor who bought your mortgage from the bank, in the secondary market, didn’t just buy your mortgage, but probably bought 5,000 to 10,000 mortgages at once. These investors package the thousands of mortgage together and resell the package to other investors who are looking for stable investments with solid returns (bonds).
  • So, if these investors are looking for stable returns on their investment, then what happens if the foreclosure rate goes up? You guessed it, the investors stop buying this type of investment and the mortgage system grinds to a halt, and the bank doesn’t have any money to lend to home buyers.

At this point, we are not seeing a major overall shortage of money in the system, but there are companies who have written some bad loans in the past and they are having problems selling their mortgages. This means they do not have as much money to loan to new home buyers. You can tell who they are by the interest rates they are charging. For example, just compare mortgages from at least three companies when you shop, and you might see an almost 1% difference between the rates ( e.g., 6.2% to 7.2%).

In summary, there are lenders who are lending money for home mortgages and have great rates because they have been consistent producers and have low foreclosures rates, so if you are looking for a stable company with good rates, ask us for some  experienced, honest professionals serving the Clearwater real estate market.

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*The above information and images are Copyright © 2007 Jack and Cyndee Haydon, Clearwater Beach Real Estate Consultants and may not be copied, reproduced, distributed, transmitted, displayed or published. All rights reserved. Plagiarism will be detected and is punishable by law.

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