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Tougher Mortgage Lending Guidelines
Why have mortgage lenders tightened their guidelines so much? Can I still buy a home with zero or no money down? Will I be able to refinance with the tougher mortgage lending guidelines? I am not able to refinance and my ARM is about to expire what should I do?
Many consumers and lenders alike are finding that the "tried and true" financing programs offered by Fannie Mae and Freddie Mac, FHA, and the Veterans Administration are proving to be the most reliable sources of hime financing. It is now very important to find a mortgage representative with a sound knowledge of financing for these mortgage loan products.
Working with a mortgage broker allows you to have access to all available programs that are still out there in these tough times. Consumers are going to have to focus more on improving their credit to get the best available loan programs. Many of the top conventional loan programs are now score driven, meaning those within different credit score brackets are eligible for different rates.
In addition to a largers down payments than before, borrowers may have to show that they have more in reserve accounts usually up to 6 months of PITI in a savings, 401K or any other type of liquid account.
While mortgage lending guidelines have significantly toughened up over the past year or so, there are still many good mortgage programs out there that will allow you to buy a home with little to no money down. These mortgage programs may have tougher guidelines in order to qualify for them than they may have in the past, but the guidelines are really no different than they were approximately 5 years or so ago. Lenders simply go greedy and started reducing their lending requirements so much that they got a little out of control and now it has come back to bite them. However, rates are still very good, there are still plenty of options out there to buy a home with little to no money down and now is a great time to buy with home prices falling.
No income verification mortgages are still available from some banks, although offered at a lower loan-to-value ratio, and higher interest rates. Some lenders limit their offer of "stated income" loans to self-employed business owners, not W2 employees. Some banks require the borrowers to sign an IRS form 4506, which authorizes the bank to request a copy of the borrowers' tax returns.
In addition to tougher guidelines, there is also the problem of "Jumbo Loans".
» DISCLAIMER: The information contained in this article on 'Tougher Mortgage Lending Guidelines' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.
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