Sales of Expensive Homes Plummet
As a result of fewer jumbo loans (loans over $417,000) many homeowners are now unable to obtain mortgage financing in order to purchase a home over $500,000. Such problems with financing are making one of the busiest times of year for home buying much less successful.
The AP writes:
Banks until recently were able to offload the risk of many jumbo mortgages by selling the loans to investors. But now, as investors burned by the subprime debacle have become extremely picky about what they will buy, banks are having to keep more of these loans on their own books and as a result are charging higher rates.
Some lenders _ such as Countrywide Financial Corp. _ have made a point of saying they’re now most focused on making loans that can be guaranteed by Fannie and Freddie.
(Fannie and Freddie are government backed/packaged loans)
With such a decline in lending availability, homeowners are forced to save more, or build equity in their homes through methods, such as here in Utah, use of a Utah home equity loan.
A buildup of equity allows for the purchase of a more expensive home, and makes large down payments affordable.
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