Sunday, November 3, 2013
Today's Home Financing Options
FINANCING CONFUSIONYes the world of mortgage financing has changed. Some for the better, a lot for the worse. Lenders have tightened their guidelines to a point that even with ½ down payment, some lender won't touch someone with a credit score under 580. We had 7 lenders turn it down. Fortunately FHA can do the loan and it is approved. But, this illustrates the difficulty that we are all experiencing in today's lending environment and the lenders, it seems, are still trying to find their way in the dark. We constantly get call from Realtors about what programs are available and how to make an offer work with the financing. First of all, virtually all of the traditional and a lot of non traditional loans are still available. The biggest difference is the underwriting guidelines that are substantially different. Credit scores rule. The lower the score, the more difficult it will be to obtain favorable rates and terms, if financing is granted at all. It is a waste of time, in today's mortgage market, to look for homes if you have not been pre-approved. Not pre-qualified but pre-approved. The buyer needs to meet with the mortgage professional and bring in all relevant documents and letters of explanation, then obtain a lender pre-approval, letter in hand. Then start their search. Once, not so long ago, it was pretty simple to just to get some information then send buyers out to find their home. Not so today. While the loans still exist the lenders are making sure that every "i" is dotted and "t" is crossed. Today's mortgage professional needs to make certain that everything is in order to properly submit a file so that it will make it to close and fund on time. They also need to have all the current loan programs, including FHA and VA as well as conforming and non-conforming loans. If not then you need to make sure you have alternate lenders available to handle those files. FHA is not the program of old. FHA has undergone substantial updates to their programs and well as their appraisals. In a lot of cases it is just as easy, if not easier, to get a loan bought FHA than conforming Fannie Mae or Freddie Mac, and the rates in most cases are a little better.So, just like a carpenter, you need all the tools to get the job done. And your lender needs to help provide those tools. If you're having trouble with traditional loans have your lender submit FHA and that should help get you deal to the closing table.