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Housing: Buy? Re-Fi? Question Is, Who Can Qualify?

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CNBC.com

We’re talking today about what will get buyers back into the market, especially when all the so-called experts we put on the air say that prices are going to continue to fall through the rest of 2008 in the bulk of the nation’s housing markets.

Interest rates are low, affordability is improving, inventory is sky-high, and sellers are well aware of the difficult market. What’s better than all that for a buyer?

Well there’s the catch-the-falling knife issue with prices, and then there’s the mortgage issue. Whether it’s new or refi, the issues are the same. A mortgage broker I know writes:

"We're undergoing a min refi boom right now with 30-yr conforming fixed rates not far off record lows. The difference this time around is the limited amount of people that qualify. It’s basically vanilla deals below $ 417k with good scores and full income documentation, but there are still plenty of them, and we are pounding the phones to let our clients know how much they can save right now with minimal closing costs involved. The story, in my opinion, is that many people would like to be refinancing right now, but either don't qualify due to guideline changes stemming from the credit crunch or because their loan size is too big. An increase to the max GSE lending limit for conforming loans would help a lot of people in this regard."

Congress is back at work next week with mortgage reform high on the agenda. Could be an interesting time ahead.

Questions? Comments? RealtyCheck@cnbc.com