As the South Florida real estate market continues to heat up, local home buyers are encountering many challenges in the path to home ownership. Securing a mortgage loan has become difficult as lenders tighten their standards, and the rash of foreign investors combined with low inventory has created an interesting environment.
For those looking to sell their homes, the hot market has produced good and bad results. Sellers are unloading their homes in mere days or weeks, even when they include a long list of demands, including 10-20 percent down payments, large deposits in escrow, and quick closings, as well as declining offers with FHA loans and requesting the bypassing of an appraisal, which could potentially bring the sale price down if the appraisal doesn’t match the asking price. Sellers are also getting close to, if not more, than their asking price.
Mortgage rates that have been stuck at historical lows for quite some time have gotten the attention of many a prospective homebuyer. Naturally, consumers think this is a fantastic time to buy a home when mortgage rates have been hovering around 3-4 percent for a couple of years now. But these days, mortgage lenders are denying plenty of Americans the opportunity to mortgage loan due to perceived risks.
Along with historically low mortgage rates have come much stricter standards that are used to determine whether a prospective buyer will qualify for a mortgage loan. Here are some of the things lenders are looking for:
“Ghost town,” “almost deserted” and “scary and depressing in the evening” are just a few ways recent visitors have described Fort Lauderdale’s Riverfront. A once bustling area of downtown with packed bars, restaurants and shops, the old hot spot has devolved into little more than a movie theater and a couple of dining options.
The economy played a big part in Riverfront’s downfall. Tourism dollars and local patronage weren’t coming in like they used to. Real estate experts agreed that the space would be best served as a mix of residences, offices, a hotel and retail. A 2007 plan to make it just that fell through when the residential market went bust. It turned out to be a sour deal for taxpayers too, as the city of Fort Lauderdale and the Broward County School Board lost about $3 million in deals leading up to Riverfront’s development in 1998. It was eventually purchased at public auction by one of its lenders who saw no competing bids.
Recently, a 23-year-old squatter tried to take ownership of a foreclosed South Florida waterfront mansion without paying a dime for it. Instead, he attempted to take advantage of an old Florida law that allows a person to gain ownership of a property simply by living in it for seven years and paying the taxes.
Five years ago, when home prices first began their steep decline from their once lofty heights, mortgage lenders were more likely to repossess a home than to try and strike a deal with the owner. Times have changed and, according to the Los Angeles Times, lenders are now more willing to work with financially stressed homeowners. Short sales, for instance, in which a homeowner sells their property for less than they owe on the mortgage with a bank’s approval, have become more common. Continue reading