Traditionally, first-time homebuyers have bought homes with little or no money down. A recent email I received from Huck Ferrill, the mortgage expert of this blog, seems to suggest that these loans might be drying up for these first-timers as of the middle of next month.
100% loans on houses are backed by mortgage insurance, which insure the lender in case the borrower defaults on the mortgage. But now, at least two mortgage insurance companies have decided not to insure 100% loans on houses in California to limit their exposure.
This can have a major impact on those buyers who have less than 5% down on a home. With lending changing everyday, especially in this market, it is important to get pre-approved (not just pre-qualified) with a mortgage broker before going shopping for a home. It is also a good idea to make sure that the pre-approval is still valid when you do find the home you've been looking for.
Thursday, December 6, 2007
First-time Homebuyers Might Have a Harder Time Now...
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It remains to be seen where all this will go, but there might be a little silver lining in some of my recent conversations wih lenders. For example, on appraisals, one lender will accept a couple comps that are less than 90 days old (6 mo is normal), as well as one pending sale, that corroborate "stable" rather than "declining" market, AND they seem to have no trouble obtaining mortgage insurance!
Also, FHA has taken the position that they will not cut max LTVs even in a declining market. So FHA Access might be the just substitute for these conventional programs we've been using. In addition, it appears increasingly likely that Congress will raise FHA's lending limit to $417,000 (Senate passed it overwhelmingly this morning), which will benefit many more homes currently for sale here.
Don't forget VA loans either, for eligible vets!
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