Vail Valley lenders: Home loan money is out there, but…
VAIL VALLEY, Colorado – Home loans have been harder to get ever since the nation’s housing bubble burst a couple of years ago. But money’s still out there, for the right borrowers.
The Vail Board of Realtors’ general membership meeting Tuesday featured a panel of speakers from the lending industry to answer questions about home loans. The group – Scott Prince of Millennium Bank, Jeff Koch of Colorado Resort Lending and Jeff Wilson of Wells Fargo Home Mortgage – were asked about the future of interest rates and whether the current wave of foreclosures has crested. But they also answered questions about whether or not people can get money for home loans.
Wilson said reports that home loans have dried up are just “sensationalistic headlines,” adding that Wells Fargo is writing mortgages for all kinds of property all over the nation.
Buyers are paying historically low interest rates, too. YahooFinance.com Tuesday pegged the average rate on a 30-year fixed mortgage at 5.25 percent.
Wilson said he expects rates to rise slightly this year, but by less than .75 percent.
The problem, though, is who can get loans.
Wilson said that current lending standards reflect those that were in place between roughly 1986 and 2002.
“It was 2003 through 2007 that was the aberration,” he said.
That means a return to “full documentation” loans, Prince said, adding that the days of “stated income” loans are gone. Those loans allowed many small business owners and people who earn much of their income in tips to get mortgages
Along with that return to tighter standards, though, it’s also harder, and more expensive to get “jumbo” mortgages – loans for more than $729,250 in “high-value” areas like the Vail Valley.
It’s also harder to get money for condo mortgages, especially those in “condotel” projects with short-term rentals and front desks.
“Condos have always been a struggle,” Koch said. “But now the pendulum has really swung to an extreme. Condos with a front desk are just being automatically moved to the jumbo category.”
Prince said Millennium Bank will lend on virtually any property, but the standards are much tighter than they were a few years ago.
“You won’t be able to get in with 3 percent down at 4 percent interest,” he said.
Beyond the “condotel” projects, some lenders are looking for any condos in a project that are used for nightly rentals, then penalizing potential buyers of other units.
Wilson said Wells Fargo is starting to evaluate condos on a case-by-case basis, and has created a new “resort” lending category.
Besides tighter standards for borrowers, lenders are also looking for higher down payments from customers. All three panel members said buyers who bring 10 percent, 20 percent or more to a deal are more likely to get loans.
And those standards aren’t going to be relaxed any time soon. Asked if the lending business would ever return to writing “subprime” loans for buyers without a lot of cash or less-than-sterling credit scores, panel members’ crystal balls were decidedly foggy.
“I don’t think anyone knows where this is all going to settle,” Wilson said.