Getting a Mortgage Today Doesn't Have to be Difficult
The credit crunch, the credit squeeze, the credit crisis... You've seen the headlines. You've heard about the government's $700 billion rescue plan to deal with it. But what does it mean to those looking to secure financing and take advantage of lower home prices? Can someone still get a mortgage in today's volatile market?
The answer is yes, absolutely! While the credit markets have certainly tightened compared to two years ago, nearly $2 trillion of residential mortgages will have been funded in the US by the end of this year, according to the Mortgage Bankers Association. This means there is plenty of money available to potential borrowers who know how to properly position themselves for success.
Get Back to the Basics
It's true. Just a couple of years ago, the mortgage process was incredibly simple, and it seemed mortgage funding was available to everyone. All you had to do was pick up the phone, put in an application, and wait until closing. That was it. And unless your credit rating was horrible, you didn't even need any documentation to get your loan approved.
While a lot has changed in the last two years, getting a mortgage today can still be a simple process, if you plan ahead. This means understanding documentation requirements, your credit history, minimum down payment requirements, and how to structure your mortgage with smaller down payments. It also means working with an experienced mortgage professional who knows what lenders are looking for.
In others words, the mortgage market of today looks a lot like it did ten years ago, long before the proliferation of the exotic and unconventional mortgage products that flooded the market from 2000 to 2006 - risky products that are now being blamed for some of the financial woes we're facing today. Fortunately, these products are no longer available. Unfortunately, this means you'll need to do a bit more work to get a mortgage than you might have had to a few years ago.
This means being prepared to supply income and asset documentation to support what is on your application. This could include your most recent pay stubs and bank statements, W-2s for the previous two years, and tax returns if you are self-employed or have non-salaried income.
If you want the best interest rates and the lowest costs, you'll need an excellent credit score as well - 720 or higher. You can, however, even with FICO scores in the low 600s, get a lower interest rate on a home loan guaranteed by the Federal Housing Administration (FHA) - but you'll need a minimum investment of 3.5% (as of January 2009) This is is a great option for you if you don't have the 10% or even 20% you might otherwise need to qualify for a low-interest fixed-rate mortgage.
Two years ago, yes, you probably wouldn't have needed a down payment at all, as 100% financing was commonplace. But this is no longer the case. To qualify for 100% financing today, you'll have to qualify for either VA or USDA loans from the government. The Veteran's Administration (VA) and the US Department of Agriculture (USDA) have special programs that allow 100% financing for those who qualify. What is particularly attractive about both of these loans is that monthly mortgage insurance is not required and interest rates are very competitive.
Other than being a Veteran, there are few restrictions involved in securing a VA loan. To qualify for a USDA loan, however, there are some income limitations and the property you're purchasing needs to be located in a designated "non-metro" area. Feel free to contact my office 920-560-5606 x 103 - shoot an email firstname.lastname@example.org or visit my website www.wisconsinloantips.com to see areas that are qualified. You'd be surprised how many areas actually do qualify for this valuable government program, so it's definitely worth investigating.
If you're not a Veteran and you can't qualify for a USDA loan, FHA is the way to go. The down payment requirement is minimal. One other benefit is that FHA financing is available, through some lenders, with FICO scores in the 500s, so you don't need perfect credit. There are, of course, loan limit restrictions, but for many parts of the country, these limits have increased recently, making FHA loans comparable to conforming loan limits in many cases. For first-time home buyers (that's anyone who hasn't owned a home in the last 3 years), the government has also created a special tax credit of up to $7,500 for those who qualify, in addition to a special program that will reimburse you on a monthly basis for the down payment investment which will enable you to rebuild a savings account or repay a relative or loan used to obtain the down-payment. And while you can't use the money as a down payment, this temporary credit can help lower your overall costs. Be sure to contact my office 920-560-5606 x 103 - shoot an email email@example.com or visit my website www.wisconsinloantips.com and inquire about this special tax credit and/or down payment reimbursement program.
In the end, no matter which mortgage you choose, the best path for anyone buying a home today is to get yourself pre-approved - not pre-qualified. With a pre-approval in hand, you won't have to worry about the credit crisis. You will know exactly what you qualify for, and by getting pre-approved, your real estate agent will typically have the ability to negotiate either better terms or a lower price for you. And that puts you in the driver seat to take advantage of some great real estate opportunities in a buyers' market.
Oh and if you are worried about credit issues, we are experts at credit restoration. Opportunities have never been better. Great Home Deals, Great Interest Rates. What are you waiting for? We are here to help in any way we can. Remember Knowledge Is Power - GET SMART TODAY - You will be glad you did.
Proudly Serving the Residential Mortgage needs of the wonderful Veterans & People in Wisconsin. Green Bay, Appleton, Oshkosh, and throughout the greater Fox Cities areas.
My team works with each client to determine the best finance package for every scenario; Not only the impact of the loan on their finances today, but 5 and 15 years down the line. Need Credit restoration; We can help. Click Here for a no cost ~ no obligation pre-approval or consultation.
Gwenn Tanvas is a Certified Mortgage Planning Specialists who truly enjoys working with First-Time Home Buyers and Government Programs such as FHA, Federal VA and USDA Rural Housing Loans. Visit her website for more information, on-line calculators and a secure on-line application. She is able to assist with transaction throughout the state of Wisconsin. http://www.WisconsinLoanTips.com or http://www.WisconsinVetLoans.com she can also be reached for comment or to answer questions via email at firstname.lastname@example.org
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