Mortgage Industry Update
The mortgage industry is not in chaos and there is plenty of money available to loan. The industry has changed though. To summarize some of the changes, and there are a few, here is a bullet list of some items for consideration when searching for a new loan and for understanding what is different since last year.
*161 lenders have closed their doors since 2006
*Underwriting standards are stricter than ever
*Credit scores less than 620 with little money down are not eligible for subprime loans
*Buyers are turning to FHA and VA loans to get 97% and 100% loans at reasonable rates
*Non-profit down-payment assistance programs are gone
*It's very tough to do a 1st and 2nd mortgage to finance a 90-95% loan of the sales price
*Jumbo loans (over $417,000) are now quoted at 7.5% or more depending on the borrower and their down-payment
*Jumbo loans often require two appraisals-one by the lender and one by the investor
*Lenders are very cautious about fraud these days
Lenders are searching for risk reduction. and scrutinizing loans heavily which have low FICO scores (credit scores), stated income borrowers, low down-payments, and high dept to income ratios.
I would highly recommend you search for an experienced mortgage broker if you're looking for a first mortgage or refinance!
