Mortgage Programs and Homeselling

For buyers, ramifications of the current mortgage industry gyrations are pretty apparent. Because lenders are tightening requirements for obtaining credit, it may be harder for many people to obtain a favorable mortgage program. (And even if you do qualify for one, you may have to put more money down.)

But what does this mean to you if you're trying to sell your home?

Fewer qualified borrowers could mean a smaller pool of available buyers for your house -- no matter what your asking price. In the recent past, homes of all sizes and value have been financed through "no money down" and "no income verification" loans, from entry-level homes through multi-million dollar properties. Although "low doc/no doc" programs are unlikely to vanish entirely, there will fewer programs and fewer loans offered in these categories.

Fewer buyers is not the only problem for homesellers. The buyers who are in the market may have less money to spend than previously. (Again, because of stricter lending requirements means, potential homebuyers may qualify for a lower amount of financing than they may have six months or a year ago.)

So fewer buyers with less money means that homeowners may have to lower their asking and selling prices. If you're a buyer with impeccable credit, this can be a great opportunity to get more house for your money. If you're the seller... well, not so good.

So should you sell now, before requirements constrict further? Or should you try and wait it out until the industry normalizes (in late 2007 or early 2008)? Because each situtation is unique, we advise that you consult with your Realtor.