As you have probably heard, the former Chair of the Federal Reserve, Ben Bernanke, was denied when trying to refinance his home. This serves as a great example of the challenges of the lending market around the country and here in San Luis Obispo.
The trends we've seen in the last 7 or so years have been quite interesting. Before 2008, huge banks were letting anyone and everyone take out a loan. This led up to a huge run-up in home prices and, ultimately, the crash of the market. Since that time, huge banks have intensified their underwriting standards, making it difficult for people to qualify for refinancing or getting a loan.
Now, all buyers and sellers are having to deal with these heightened standards. If you are buying, it's crucial to get pre-qualified before you even start looking at homes, so you know exactly what you can afford. After all, you don't want to waste time looking at homes that are way out of your price range. Since more verification is required than before, it's better to get the process started sooner. If you are selling, be prepared to deal with multiple delays. Your asking price and the condition of your home affect your ability to refinance your property. You need to get your smoke and carbon monoxide detectors replaced and perhaps consider having a termite inspection as well.
One trend that is quite interesting is in the higher-end market - it's doing quite well. The jumbo loan market is really attractive right now, as rates can be better than conventional financing. There is a program available where you only have to put 15% down for mortgages ranging from $800,000 to $1.5 million. The 85 Loan to Value program allows you to take out a jumbo loan with only 15% down and not have to pay mortgage insurance. On top of this, the rates are just above 4%, which makes this money incredibly cheap right now.
In short, you need to be prepared if you are a buyer, making sure you are pre-qualified beforehand; if you're selling, you need to get your home in great shape before having an appraiser come by; and, lastly, it would be wise to consider taking out a jumbo loan if you can afford it. It's a great option if you are in the high-end market.
If you have any questions about the interesting trends in our market, don't hesitate to reach out to us. We're proud to be your number one real estate resource!