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REALTOR®: Realtors help home buyers find the right home and mortgage

Wednesday, March 14, 2007

Today's home buyers have more options than ever before when it comes to mortgages, but some of these financing alternatives can put unsuspecting consumers at risk. Now more than ever, home buyers need the help of an experienced real estate professional to help them navigate the complex waters of mortgage lending and creative financing.

At the height of the housing boom three years ago, many sub-prime loans were made to borrowers. As the housing market transitioned to more normal conditions, these risky borrowers and lenders have been impacted. Foreclosure rates are up, dozens of lenders have shut down, and many have stopped sub-prime lending. In 2000, sub-prime lending only accounted for 5 percent of loans; in 2006, they comprised over 21 percent of loans.

Some people speculate the rise in foreclosures and troubles lenders are experiencing may have a ripple effect throughout the housing market. But Mark Burns, president of the Silicon Valley Association of Realtors® (SILVAR) said this is unlikely to happen. Burns said the housing industry is broad, the economy is doing well, and while prices may be flat for a while in some areas of the state, homes still continue to appreciate in Santa Clara County.

Data from REInfoLink, the Multiple Listing Service for Santa Clara County and four other counties in the Bay Area, reveal the median home price for the county in February 2007 was $790,000, up from $765,000 in February 2006.

In addition, the National Association of Realtors® (NAR) Home Price Analysis for the San Francisco Region, which includes the Santa Clara County area, also reports the percentage of homebuyers in the region who utilized sub-prime mortgages (those with rates more than three percentage points higher than the average market rate) was 4.3 percent in the first quarter of 2006, much lower compared to the nation as a whole.

With these favorable factors, the current housing market may be the best opportunity for home buyers in the next few years, Burns said.

"There are many new mortgage products offered in today's market, but not all of them work for all buyers, and some carry considerable risk," said Burns, a Realtor with Coldwell Banker in Cupertino.

"Because they are central to the real estate transaction, Realtors are uniquely positioned to provide guidance that will help home buyers make informed choices about what mortgages are right for them," Burns said. "Their knowledge of the local market and access to financial resources are just two of the ways that Realtors add value to the real estate transaction."

That's why NAR has added two new brochures to its "Shopping for a Mortgage?" consumer education brochure series. The first brochure, "How to Avoid Predatory Lending," helps Realtors educate their clients about predatory lenders. It also advises consumers about how they can protect themselves when buying or refinancing a home. NAR created this publication in partnership with the Center for Responsible Lending.

NAR developed the second brochure in partnership with the U.S. Department of Housing and Urban Development. "FHA Improvements Benefit You: FHA Insured Mortgages" was designed to educate home buyers about recent improvements to streamline the Federal Housing Administration's mortgage application process and make the FHA-insured mortgage program more user-friendly.

The predatory lending brochure helps consumers understand and identify predatory lending practices and avoid unscrupulous lenders. Nearly all predatory lending occurs in the sub-prime market, and it can happen to people who are buying a home as well as refinancing a home they already own. This market serves people with less than ideal credit scores, often due to short work histories, high debt or late payment records.

The FHA-insured mortgage brochure targets consumers who may benefit from an FHA-insured mortgage. These mortgages are available to consumers with less-than-perfect credit, don't require large down payments, and offer interest rates lower than sub-prime and other non-prime mortgages; they appeal particularly to first-time buyers who might not otherwise be able to afford a home.

Members of SILVAR encourage consumers to educate themselves about the home buying process and talk to a Realtor? to learn about their financing options. To read both brochures online, visit www.realtor.org/housopp.nsf/pages/mortgages?OpenDocument


The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.

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