What Does The "Declining Market" Label Mean To Your Mortgage?

As prices are coming down from the boom period, one result has been for Lenders to label Phoenix Metro as a declining real estate market.  What does that mean to you?

One challenge is that Lenders are now funding less of a loan because they are worried that in the coming year(s) that the property could become worth less than the mortgage amount.  What that means to you is that you may have to come up with a larger down payment to compensate for the difference.  Remember when it was normal for a Buyer to come up with 20%? well we are not necssarily there yet but chances are you will have to have more money available in order to buy.  Currently, some buyers have come to closing on a house and suddenly are told by their lender that they have to come up with additional funds for a down payment (5%?) or they can't get their mortgage.  Sudden big problem for both the buyer and seller!!!

Another challenge is that some home owners are now receiving letters from their lenders informing them that their home equity lines of credit are frozen. 
Again, Lenders are worried that if a homeowner uses their line of credit that the value of the home may continue to decline and once again the Lender will not have sufficient collateral for the loan.

What can you do?  Put 20% down on a home and there is no problem.  Talk to your mortgage person about different types of loan available, including FHA and VA or other programs available which can still make it possible for someone to buy a home.