It would have to be: “Show me the money”. Today, lenders are risk averse and want buyers/borrowers to have a larger stake in their home purchase. Buyers with 20% down payment or more should have no problem obtaining a mortgage; as long as their credit score is above 720.

However, buyers seeking jumbo loans (over $729,950) may still have difficulty getting funded. Low cash and low credit scores are a recipe for failure in this fragile mortgage marketplace.

 Here are 8 additional facts you need to know before you apply for your mortgage:

1. Declining markets- lenders are randomly declaring certain markets as “declining market” ( Montgomery
   County is one of them). In a declining market, lenders will require 5% higher down payments from borrowers.
2. Credit Scores- the almighty credit score is more important than ever. Above 720 is good, below that and you will pay a penalty in higher points or higher rates.
3. NO DOC loans are gone. Be prepared to document your income, your assets and liabilities, your employment and provide your tax returns.
4. Higher conforming loan amounts- both conventional and FHA/VA loans have increased the conforming loan amount from $ 417,000 to as high as $ 729,750. Conforming loans are backed by Fannie Mae & Freddie Mac. Banks like these loans because they are guaranteed by the government.
5. Jumbo loans - those above $729,750 have become more difficult to obtain.
6. No more 80/10/10 loans. What happened? The 2^nd trust lenders left the market. No banks want to be in 2^nd place in a market where home values are declining. Too Risky.
7. Starting December 2008, all lenders will be required by law to submit an appraisal request to a third party who will then choose the appraiser and perform all communication between appraiser and lender. Gone are the days when individual loan officers could communicate directly with appraisers in an effort to influence them.
8. FHA loans: These type of loans were a rarity in B-CC and Potomac because the highest FHA loan amount was only $ 417,000. Now that this loan limit has been raised, FHA loans are now a more viable option for our marketplace. But even FHA loans have their pitfalls, including added costs (higher closing costs, higher monthly costs and higher loan fees).

Share This