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20% Down, Good Credit and Good Income May Not Get You A Mortgage? Wow.

Posted on Tuesday, May 22, 2012

With rates so low and dipping lower on every bad news item in Europe you would think real estate mortgage availability would be at an all time high. Low rates mean low payments which means more affordability for the same stream of income – but wait, not so fast.

Florida Realtor reported last week “even creditworthy borrowers are finding it difficult to get a mortgage nowadays, and it’s unlikely banks will ease their standards anytime soon, Federal Reserve Chairman Ben Bernanke told a banking conference in Chicago Thursday (last week). While banks have made huge strides in improving their balance sheets and overall lending – such as for credit cards and auto loans – banks continue to be extra cautious when it comes to issuing new mortgages, he said. Even borrowers coming with a 20 percent down payment on a home purchase may face hurdles unless they have stellar credit, he said.”

So what happens when credit is tight – a number of things you may not have thought of:

1) Folks need to sell their “up north” place before they buy their Naples place
2) Seller’s are looking for all cash offers because they do not want to take their place off the market only to see the deal fall through down the line because the buyer’s credit did not come through
3) Buyers need to obtain a pre-approval letter from their mortgage company to prove to the sellers they are legitimate
4) Seller’s may not provide financing because many times they need the cash, or they jut do not trust seller financing given some of the horror stories they hear – like squatters running over their foreclosure capabilities
5) Private money springs up to help buyers or more like renovator/flippers – but at 9% or 10%. Why so high? Because this is the risk return the private money market may be seeing in town
6) No insurance may mean no mortgage. Some seven-figure properties no longer eligible for Citizen’s insurance (in state program put a ceiling on coverage) are experiencing premium shock – and if you cannot get insurance that lender is probably not going to lend on something he cannot insure. So cash is king sometimes on the big deals near the water.

Credit oils the market. Without credit things slow down. With credit things speed up – sometimes causing a real estate bubble as we know too well. But wow, 20% down and good credit and good income may not get you a mortgage? Have we gone too far?


No legal, investment, or tax advice is being given in this Blog.  Consult with legal, financial and tax professionals before acting on any real estate transaction.  Actual real estate price and sales results are subject to market forces and are not completely predictable. The writings of this Blog are intended for the sole use of our clients.
Some of the data relating to real estate for sale on the website comes in part from the Broker reciprocity program of M.L.S. of Naples, Inc. The properties displayed here may not be all the properties available through the MLS reciprocity Program. This information is deemed reliable but is not guaranteed. Buyers and sellers are responsible for verifying all information about their purchase prior to closing.
Mark Goebel, PA is a REALTOR with Coldwell Banker on 5th avenue in Naples, Florida with 35+ years of visiting and living in Naples. After 25 years at Accenture, Mark retired as a managing director and spends his time helping non profits and building a Naples real estate team with his wife Nan. Talk to Mark and Nan about life in Naples and why they chose this place to live full-time over all others and enjoy Naples real estate.
Mark Goebel, PA
REALTOR Coldwell Banker 5th Avenue South
Mobile: 239.595.3921
Facebook: NaplesBestAddresses
Twitter @mcgoebel
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