The credit crunch has had diverse effects on the real estate market. The interest rates are nearing a record breaking low, while mortgage money doesn’t seem to be available for those who are in a position to purchase. Mortgage brokers struggle to secure affordable funds for their clients. They are forced to widen their service areas. If you are in a position to purchase a home, your credit rating must be almost perfect for lenders to risk a loan to purchase real estate.

With the banks accepting bale outs, it is not easy to secure financing through this avenue. They have loaned their available lines of credit. The lenders have homes that are forced to foreclose and are not equipped to resell them. This keeps credit funds tied up and the available funds are not fluid.

The credit crunch has turned the American dream into something unattainable for the average family. Owning property has become a challenge and hard to obtain. The squeeze has virtually shut the avenues to finance homes or business property. People looking to buy for a home found out that even if they are eligible for home loans, the restrictive lending procedures have forced lenders to freeze off mortgage loan applications from people who should receive mortgage approval. All of the conditions that put them in financial crisis have been returned to former conditions, but lender procedures will not allow these people to receive mortgage approval.

Young couples once purchased their homes as they began their lives together. This is not the usual situation today. With the lack of available funds, these couples do not have a credit background to secure funding. So instead of investing in a home their money is spent on renting, because it can take years to establish a credit rating. When you add children to the above analogy then purchasing a home becomes a difficult thing to do. As for couples with children, their budget is stretched even further, thus requiring a larger income to put on down payment.

Another factor that the credit crunch has caused is the number of commercial properties that are vacant as businesses lose their battle to survive this extended decline in general business activity. When these businesses close their doors, the employees lose their lively hood.

As the waves of foreclosures continue to increase, many people are in danger of losing their homes. This situation has led to a market of pre-owned homes with low selling prices. Because of the expected rise of foreclosures that will continue to pull down prices, homeowners are finding themselves facing financial ruin.

With the lenders facing economic short falls, they are finding themselves owning homes they have foreclosed on. The loans go unpaid leading them with no funds available to lend. It is a vicious circle that leads nowhere. Some banks still have revenue available for home loans; however, the requirements are hard to meet which may not be achievable for the average home buyer. For now, people just have to wait things out and keep on doing what they can to rectify their financial situation.

Source by Alvin Clavines

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