fha mortgage

Usually when someone has a headline like that they have a lineup of new and cool things that will be introduced, like a new line of cars or some new players for the Broncos (which could happen). I am not introducing a new line of mortgage products here. I wish I were. It would be fun to tell everyone that there are some new loans that would make buying a home much easier and cheaper. However, if you are buying or refinancing a home using some form of mortgage financing then there are some new things going on that you need to know about.

First of all, this is a risk based business. Always has been and always will be. The bigger the risk that you take the bigger potential there is for a problem. In the past few years there were riskier loans being sold to people that have now caused some of the problems we are seeing today. Because of this there is now a tightening in the lending business that could affect your ability to buy a home. In another post on the Denver IQ blog recently, Jerra Ryan wrote an excellent peice dispelling the rumors running wild that all properties in the Denver Metro Area were under the ominous cloud of a “Declining Market” If these rumors were 100% true then any home sold in these areas would immediately be hit with a 5% reduction in the maximum loan allowed. The truth is that this MAY happen under certain situations but it is not an absolute. However it is a good indication that the mortgage industry is taking a more conservative stance when it comes to risk.

Another result of the tightening guidelines is that you need better credit to get some of the loans that used to be easier to get. The minimum credit scores have gone up on most mortgage products as well as the amount needed for a down payment. Stated Income loans are much more difficult to get. The lending industry used to hear the accusation that “you give loans to anybody” Well it was never quite true but it is even less true today.

Another big change that you will see in 2008 is how appraisals will be viewed. Once upon a time when property values where going up and up and up and all was good with the world, an appraisal would come in and hardly be noticed at all as long as the bottom line value was where it needed to be. I believe that in 2008, we will see a crackdown on appraisals. There is a saying in this business that an appraisal isn’t an appraisal until the underwriter says it is. Appraisals will now be scrutinized down to the last figure and the last word. When a market area is in a decline then the investor that eventually buys the loan wants to make sure that the value is truly there. I have seen instances where an appraisal came in at a certain value but after a review, the value was dropped down to the point where the loan could not be done.

Well enough with the doom and gloom. There are some good things that are happening. Rates are generally down at this time. There is legislation pending that would allow for FHA insured loans to have a lower down payment, from 3% to 1.5%. This same legislation could change the maximum loan amount on an FHA loan up to $417,000. Up to now the maximum FHA loan limit in the Denver Metro Area (excluding Boulder County) is at $308,370. a change in the maximum loan amount would open up more good buyers to a higher purchase price if that is what they qualified for. FHA loans are not driven by credit scores but rather credit situations so they are more lenient in certain situations where a conventional loan is stuck to a FICO score rating. Also, There are still safe, 100% loan programs available. CHFA (Colorado Housing Finance Authority) has said that they will continue to support their 100% financing options even if a property is designated as being in a declining market.

So as you can see there are new things that you need to be aware of if you are looking to buy or refinance a home but there are plenty of reasons to move forward as well.

Written by Mark Afman - Visit Website Sphere: Related Content