Mar 05 2008
Lenders Have Tightened Up
Let the good times roll.
Only a short while ago, lenders were more than happy to give loans to home buyers without a job, with poor credit history, and without verified income. While common sense would tell you that these types of borrowers are very risky, a lot of lenders seemed to have checked their brains at the door. Why not? They were collecting huge loan fees, and weren’t too worried about the quality of their loan portfolio since they were packaged and sold on the secondary market.
What has changed?
In the last year, the mortgage market has gone through some turmoil,with many mortgage companies closing their doors. Investors stopped buying these dubious loans, packaged and sold as CDO’s. It has been a painful transition for some, but going forward it will help the remaining lenders be more fiscally responsible and prudent. And, credit worthy borrowers will still be able to get loans. That’s all good.
Today’s Mortgage Market
Today’s home buyer is most likely to puchase their home with a conventional loan, or an FHA loan.
Conventional Loans
Conventional, or conforming loans are fixed rate 15 or 30 year loans, with a lending limit of $417,000. These loans require good credit scores, stable job history, and a modest down payment-5% or more.
FHA
For those who cannot afford to put at least 5% down, an FHA loan may be ideal. FHA also offers loan programs such as the Ameridream and Nehemiah, which offer 100% financing, although these programs are going to be modified or phased out over the next few months. The FHA loan limits are $304,950 in Clark County.
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