How The Mortgage Landscape Has Changed

How the​ Mortgage Landscape Has Changed
There used to​ be an almost dizzying variety of​ mortgage options out there. But that was then. This is​ now. And anyone who wants to​ buy a​ home these days needs to​ be prepared for a​ shrinking number of​ choices. Lenders are pulling backto the​ basics. But its not all bad news. a​ homebuyer who has proof of​ income,​ cash reserves,​ or​ good credit should sill be able to​ find a​ home mortgage loan. But you​ have to​ be ready and willing to​ do some shopping around firstcomparing and negotiatingjust like you​ would if​ you​ were looking for a​ new car. Speak to​ several lenders. And its also a​ good idea to​ contact several mortgage brokers,​ too. They act as​ liaisons between lenders and consumers.
Its never been more important to​ be an informed homebuyer. Learn the​ basics of​ what it​ takes to​ get a​ mortgage. Start by finding out if​ the​ lender requires a​ down payment,​ how much it​ is,​ and if​ you​ can afford it. Because of​ the​ current economics of​ housing,​ most house hunters must have the​ money for a​ down payment. Thats because the​ nodownpayment loans that were available during the​ boom years are now almost nonexistent. Many lenders now insist on​ a​ minimum of​ five percent downmore is​ even better.
Youll also want to​ check to​ see if​ youll be required to​ buy Private Mortgage Insurance PMIwhich will be added on​ to​ your monthly mortgage payment. Many lenders insist on​ this,​ because if​ protects them against loss by borrowers who fail to​ pay. as​ a​ rule of​ thumb,​ expect PMI if​ a​ loan exceeds eighty percent of​ a​ homes value. to​ avoid the​ added expense of​ PMI,​ some borrowers get a​ piggyback mortgagewhich is​ essentially taking out two loans. the​ first loan covers eighty percent of​ the​ cost of​ the​ home. the​ second is​ a​ homeequity line of​ credit that covers mostif not allof the​ balance. However,​ be aware that these piggyback loans are few and far between these days; many lenders see them as​ a​ risk theyd rather not take. Thats because if​ a​ homeowner loses the​ house,​ the​ proceeds from the​ sale would go to​ paying off the​ first mortgageand theres usually very little left from that to​ cover the​ second mortgage.
Now,​ what about those lowornodocumentation loans that were so popular awhile back? Well,​ theyre basically extinct. Why? Because the​ singlemost important thing to​ lenders these days is​ a​ borrowers credit score. the​ lenders are relying more heavily than ever on​ that score to​ assess a​ borrowers ability to​ repay a​ mortgage on​ time. Borrowers that look risky will not get those lowerinterest loans with good terms. in​ fact,​ theyre not likely to​ get a​ mortgage at​ all. Loans available to​ people with credit scores of,​ say,​ 660 just a​ few months ago are no longer out there.
But even if​ you​ have a​ good credit score,​ you​ need to​ be aware that you​ need to​ use it​ wisely. For instance,​ weigh your choices carefully if​ youre thinking about taking out a​ loan for more than $417,​000. This is​ known as​ a​ jumbo loanand mortgages that exceed this make lenders very wary; they are perceived to​ be much riskier than conforming loans.
So whats a​ potential homebuyer supposed to​ do? if​ you​ credit score is​ on​ the​ low side,​ get serious about improving it​ before you​ start looking for a​ mortgage. it​ will definitely increase the​ number and types of​ mortgage options available,​ as​ well as​ the​ rates and terms of​ those mortgages. if​ your credit score is​ high,​ then keep it​ that waydont push for the​ maximum mortgage you​ can get. Be conservative.
With careful tending,​ the​ mortgage landscape in​ your little corner of​ the​ world will start looking considerably more lush,​ healthy,​ and beautiful.

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