No more easy money

From the Courier Post:

With credit crunch, location does matter

You’ve heard about how the credit crunch has made it harder for many types of buyers to afford a home or qualify for a mortgage.

First-time buyers. Those moving up to larger homes. Buyers with marred credit or little cash for down payments. Those in pricey areas who need “jumbo” loans exceeding $417,000.

“If you’re going to get a loan today, in comparison to six months ago, you’ll have to bring more money down, better documentation and better credit characteristics to get the same terms,” says Doug Duncan, chief economist of the Mortgage Bankers Association.

Meanwhile, buyers with jumbo loans are getting slammed with higher rates. In costly areas — think New York, Los Angeles, San Francisco — many buyers with such loans are suffering.

In the six weeks that ended Sept. 5, the average jumbo rate rose to 7.38 percent from 7.03 percent, even as rates on loans below $417,000 fell to 6.5 percent from 6.75 percent, says. Jumbo rates fell to 7.2 percent last week.

Harold McKoy began house shopping in Yonkers, N.Y., two months ago. He quickly learned that easy credit is history.

Unlike in many other parts of the nation, high demand for real estate in much of the New York City area is propping up housing prices, making it especially difficult for first-time buyers such as McKoy.

“I’ve heard that you need a preapproval (for a loan) before some agents will even show you the house,” McKoy, 37, said after touring a bungalow one recent Sunday with his girlfriend and his two sons.

McKoy is preapproved for a loan but knows that won’t save him if the lender changes its terms. He’s heard some lenders are demanding larger down payments at the last minute. “I’m not so much worried about getting a loan,” he says. “I’m concerned about . . . whether it’ll be enough to get the house I want.”

John Piazza, a broker in Yorktown Heights, N.Y., says, “In many cases now, (when a deal) has gone close to closing, the bank has pulled out and said, “We don’t have that program,’ or they ask you to put more money down.”

Peter Pellegri of Peekskill, N.Y., blames the credit crunch, in part, for losing out on a house a few weeks ago. He and his wife, LuAnn, had been preapproved for a loan. But it required that they first sell their condo — a task that’s become harder in a sputtering market.

“Four years ago, when we bought our condo,” Pellegri recalls, “we didn’t need a mortgage commitment, just a preapproval.”

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