Is The Housing Crisis Over ?

I just read an article in The Wallstreet Journal indicating that the housing crisis is over. It's a pretty lengthy piece, so rather than cutting and pasting it into this blog, I'd rather have you click on this link so you can read it in its entirety (after you finish reading my blog, of course): Wall Street Journal: The Housing Crisis Is Over

Not to rain on anyone's parade or anything, but before you start jumping up and down and doing the happy-happy-joy-joy dance though, here are a few real world facts I thought I'd throw out there:

• Just because the market's bottomed out doesn't mean the value will shoot up like crazy over the next year or so the way that it did five years ago so don't start counting your equity chickens before they hatch. Besides, a house is not a giant ATM machine.
• Lenders have gotten stricter with their guidelines. Forget about 100% financing loans without having to provide income documentation. Those vanished right about the time lenders started keeling over from the vast number of defaults on these same I-don't-have-to-see-how-much-you-make loans that they churned out like crazy.
• If you're looking to buy and your score is as low as 580 and you don't have enough for a down payment or closing costs, you may still qualify for an FHA loan BUT you (and your co-borrowers) need to be in the same line of work for at least two years, you can prove by way of paystubs and tax returns that your house payments plus other debts aren't more than 45% of your total gross monthly income.
• If you are looking to refinance and it's difficult to document your income (like a late actor I knew of who made most of his moolah signing autographs at fan conventions but would require the convention organizers to pay him in cash so he wouldn't have to declare it, which isn't fair to the rest of us, but that's a whole 'nother Oprah), you can still do a stated income loan but you have to have reasonable assets (at least 2-3 months worth of house payments) and a score of at least 680 to compensate for the fact that you don't have the full income documentation to back up whatever you say you make. And yes, you have to have at least 20% equity left in the property after the refinance is done.
• If the rate on your loan is about to adjust for the worse and you currently have a 1st and 2nd loan, even if the combined amount of both loans is 110% of the value of the property, if your 1st loan amount is under 95% of the value of the property, you may still be able to qualify for an FHA loan just to bring your interest rate down. But again, you'll need to provide full income documentation.
• You can't qualify for a loan (FHA or conventional) if your bankruptcy hasn't been discharged for at least two years. No way. No how.
• If you've got the triple threat (crappy credit, have difficulty documenting your income, don't have enough liquid assets) but you need a cashout for some reason and you need it baaaaad, there are still hard money loans out there but it only works if you've got tons of equity (as in, your loan is only 60% or so of the value of your property) and you're willing to pay the figurative equivalent of an arm and both legs in lender fees (it can go as high as 18% of your loan amount) and interest rates (which can be as high as 11-16% as well).

Every scenario is different though, so I always say, it never hurts to discuss your situation with a trusted mortgage advisor who can provide good, solid advise.

Till next time,

Dezzi Rae (The Mortgage Maven)

www.dezzirae.com