Since the foreclosure crisis began, the emphasis has been placed on avoiding a similar problem in the future. Consequently, the government and banks have instituted heavier restrictions on the types of loans they are offering to prospective homebuyers; understandably so, since loans should not be temporarily affordable.
The lending restrictions gave way to a period when cash buyers have been the primary investors. As these buyers pick away at the affordable inventory, more expensive homes remain on the market. Subsequently, the market has been recovering and mid-income families are beginning their search for a home. With home prices increasing 10 percent annually in certain areas of South Florida, many families will be unable to find homes they can afford with the restricted loans that are currently available.
The general foreclosure law in Miami, dictates that home payments are considered affordable if the total combined payment (principal, interest, taxes and insurance) is under 31 percent of the household income. In the past, buying a home was only viable to many families through loans that offered interest-only payments during an initial period and other similarly risky loans. The current lending restrictions leave the nation in an unprecedented position concerning new middle class homebuyers.
We’re not exactly sure what all this means yet. It’s something to keep a close eye on, if you’re planning to buy a home in the near future. Even though home prices are rising and the economy is recovering as a whole, there are many families that are still struggling with foreclosure law in Miami. If you’re one of these families, you don’t need to feel alone, we are here to help.