While financing has become a little more difficult in recent months, there is still good programs for buyers. The most common mistake I see buyers make when getting financing for their new home, is going with the first mortgage company that tells them they are approved! People will shop for a home and bargain on the price but never bargain shop for their mortgage! Believe me, if one company approves you, others will also and you should shop several companies to see who has the best deal for you. Shopping for a mortgage will NOT harm you credit score, the credit reporting agencies will recognize you are shopping around and it will not appear on your credit report as more than one "hit". And there is money to be made in finding the best mortgage for your particular circumstances. You will not find much difference in interest rates, but a eighth or quarter point will mean a lot over the life of the loan. And much of the "closing cost" are actually profit for the lender and can amount to thousands of dollars. Ask each potential lender for a  written "Good Faith Estimate", giving each one the same parameters so you can compare "apples to apples". Some lenders will fudge some on this but not much since it is goverment regulated and required. It is better than nothing and your agent should be familar enough to recognize any fudging. So compare not only the interest rate, but the terms and the "fees" for each loan.  

So, who is buying in this strained market? Well, it is not the investors, the flippers, the people moving up or even 1st time buyers. While these groups dominated the market form the 90's through 2006, that is not the case anymore. According to an article I read and agree with, there are several groups making up the large majority of buyers in the current market. 1. People with kids just starting school or high school, looking to get into the best schools. 2. People being transferred for a new job position. 3. Apartment dwellers with growing families needing more space. 4. Retirees moving to a better climate or closer to family. 5 Divorce and separation people moving out of co-habitation. This is certrainly different from the past years. These have always been good reasons for a move but used to be the minority reason. I guess the minority has become the norm. What a change.

I'm afraid the short answer is a resounding YES! If you fit into one of the categories above you are in danger of losing your home on very short notice. If your landlord gets foreclosed you will be out on the street. A foreclosure nullifies your lease or month to month rent agreement. Renters and tenants also stand to lose their deposit which is gone with the foreclosure. Lease purchase are at the greatest risk since they can lose their down payment all together, and this could be thousands of dollars. It is very hard to protect yourself in this situation since the owner is not going to tell you he is in trouble and may lose the home. And there is nowhere to go to keep a check on the landlord financial situation. Your best shot is to look carefully at the foreclosure notices that are published in the local paper. GA law requires this be published for a period of 4 weeks before final foreclosure. If you see your home is being foreclosed you have little choice but if you like the place and have the credit required, you might approach the lender about possibly buying the home. Otherwise, be prepared to move with short notice and take the loss.

The goverment in conjunction with Fannie Mae, Freddie Mac and 27 loan servicers are trying a new program for homeowners in trouble with their mortgage. The new program is targeted at high-risk borrowers who have missed 3 or more mortgage payments but have not yet filed for bankruptcy. The program is designed to get them current by reducing their payments to 38% of their gross monthly income (I believe the previous was 43%). To get the payments down to that level, lenders and loan servicers may agree to extending the loan up to 40 years, lower the interest rate on the loan or reduce the principal and add it to the back end of the loan. Lenders who decide the cannot create an affordable payment using this program will  further evaluate the borrowers situation under a standard modification process. We certainly need the help but I'm not sure this is all that great. Better than nuttin' I suppose.

I do not know how they got financing for these mortgages, but many people are spending 1/2 their income on housing! Some areas in California, Florida, and Las Vegas are paying 50 to 58% of their pay for housing. Anything over 30 to 35% is too high, in my opinion and most lenders agree. I tell my buyer clients to try to keep house payment to one weeks take home pay (about 20% of their income). Doing this will allow them to furnish the home, take vacations and eat out on a regular basis. To me, there is little worse than being "house rich and cash poor". Everyone would like to have a McMansion but most are not happy when the house payments consume most of their pay. Keep it reasonable and you will be much happier in your new home, even if it does not measure up to your desires.

HUD's 4 billion dollar grant program is getting closer to reality. They are meeting Oct 14th and Oct 16th to get the program under way. The program is called "Neighborhood Stabilization Program" and it will fund state and local goverments acquire land and property, demolish or rehabilitate abandoned properties. It also will allow the state and local goverments to offer down payment and or closing cost assistance to low and moderate income buyers. If used properly this will help stabilize neighborhoods hit hard by foreclosures.