As the housing market inches its way back toward recovery, increasingly tightening lending standards are preventing many potential buyers from securing the financing necessary to make a home purchase. Although lending has become the latest industry challenge, brokers across the country are taking action and stepping up to educate consumers and facilitate smooth transactions in any way possible.
“I think the tighter lending environment is affecting how many new first-time home buyers we have in the market, and part of what we’re having to do is educate the consumer,” says Barbara Grande, broker/owner of Coldwell Banker First in Fargo, North Dakota, and also a member of RISMedia’s Real Estate Information Network® (RREIN).
Like many buyers in other parts of the country, buyers in Fargo are experiencing longer waiting periods, having to save up more of a down payment and having to be more cognizant of their credit scores, but Grande says her market has been fortunate, with lending issues not as drastic as other parts of the U.S.
“We’re one of the few states that actually has a surplus in government. Things in North Dakota are a little bit different than other places,” she says.
To further help matters, Coldwell Banker First sports its own in-house mortgage company, not only having an originator, but an underwriter as well. “I think that makes a huge difference when we’re dealing with the bigger lenders that we’re having more trouble with. Those are the ones that have tightened up and have such strict guidelines,” says Grande.
Although Fargo’s local lenders have added a few more hurdles to the process, Coldwell Banker First hasn’t had issues securing the loans they need from these smaller companies.
One area needing improvement in Grande’s market is the difficulty in securing FHA loans. With average sales in the $155,000 – 160,000 range, Coldwell Banker First is a big user of FHA loans, which have proved harder to get because buyers need more of a down payment.
For the future, Coldwell Banker First is in talks of implementing office seminars for further educating the public, in particular, in the condo market. Due to the recertification of condos nationwide, the company may put forth efforts to help condo associations with the recertification process and to help condo buyers get financing.
“It’s a huge issue nationwide with condos. In our area, condo buyers are having a very difficult time getting financing,” says Grande. “In many units, they can’t rent them out, so sellers are now stuck not being able to make moves. Probably the biggest issue we have is with the condo market.”
Despite a few rough patches in the industry, now is still a great time to seek financing and purchase a home. Grande recommends that buyers do their homework in order to be fully prepared for what lies ahead. Buyers should find a good mortgage lender and find out what credit scores are required for the best possible rates. They should also check out a credit bureau report and see what is on there. Being savvy about loan ratios, financing and down payments can make all the difference.
“We didn’t have the big increases that other areas experienced, so we don’t have the decreases,” says Grande. “Our market has remained fairly stable and we count our blessings every day for that.”