Question Details

Dezzy, Other/Just Looking in 94103

I've read that mortgages are increasingly going to become more difficult to get. Is this true?

Asked by Dezzy, 94103 Fri Aug 10, 2007

I've read the national news on the mortgage crisis, but I want to understand how this might affect my ability to get a mortgage in the future (especially if I don't plan on putting 20% down). Can someone explain?

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If your FICO score is excellent, if the home loan is conforming (under $417k), if your job history is strong and if your ratios (debt to income) look good, chances are you will be able to find a workable mortgage.

With these elements missing, mortgage money will be more expensive and difficult to find.
3 votes Thank Flag Link Sat Aug 11, 2007
Roberta Murp…, Real Estate Pro in San Diego, CA
MVP'08
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Dezzy, Don't despair! If we've learned anything during the past 7 years is someone is going to come up with a loan product which will meet your criteria. I have been on a mission as of late trying to discover all the different loans out there for the consumer. Even in our expensive region of the country you still have loans which are community based, for first time homebuyers and for specific professions (firemen,police, nurses, teachers,etc). I would hit ALL the big players and see what they have for you. NOT every area of San Francisco is a $1,000,000 plus!! Check with BofA, CountryWide, Washington Mutual, Wachovia,Indy Mac,and your local credit union and larger brokerage firms. You'll be amazed what's out there. Don't be seudced by the "teaser" rate which you darn well know is tooooooo gooooood to be true!! Ask for a Good Faith Estimate before you do ANYTHING to do with money!
2 votes Thank Flag Link Wed Oct 10, 2007
I don't think so, fannie mae and freddie mac are still doing 100% loans.
Web Reference: http://getprequalified.com
1 vote Thank Flag Link Wed Nov 7, 2007
There are 14 primary affordable first time home buyer programs in California, up to $650,000 with a 620 credit score and no down payment requirements. Debt to income ratios with all government backed and insured mortgages will range from 40% to 48% or so, depending upon "compensating" factors, such as credit score, employment history and cash reserves.

Buyers with a $400 car payment will qualify for $56,000 less home/loan regardless of compensating factors-every $100 in fixed monthly debt = $14,000 less home/loan. We use a company that specializes in auto refinancing to lower payments by as much as 65%.

Do your research-Government and CRA funding is available to First TIme Home Buyers in California.

Michael Lewis
Home Buyer Service
800-608-9833
1 vote Thank Flag Link Wed Nov 7, 2007
Roberta has given the right answer.. as long as you are able to use a conforming loan and have good credit you will be fine.. those who need jumbor loans ( over $417,500) will have fewer choices then in the last 4 years. Many lenders are going to demand higher down payments along with fully documented loans.
1 vote Thank Flag Link Sat Aug 11, 2007
Kaye Thomas, Real Estate Pro in 90266
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Hi Dezzy:
The mortgage crisis is just a sympton of the pattern of behavior that has gone on for some time.

How will affect your ability to obtain a loan? That depends entirely on you. If you know you want to purchase a home in the future (near or distant) start saving now, start fixing your credit, and be ready to bring all your proof of employment to the table.

If you come prepared and in good financial health - you should be able to obtain a traditional loan - the process will just be more stringent and they will scrutinize your information much closer.

This is a win win for you the consumer as you will be more apt to purchase a home you can actually afford and not mortgage yourself into a foreclosure. The industry will benefit because they have responsible consumers in homes they can afford and pay for accordingly.

Don't get discouraged - GET PREPARED. Good luck to you in your pursuit of the American Dream!
1 vote Thank Flag Link Sat Aug 11, 2007
Hi Dezzy,

Yes, this is true. In fact, it’s already happening. This is as a result of all of the foreclosures and short sales occurring, which are a result of all of the 100% financing and no doc loans issued over the last few years. Many loans were issued to people that should never have qualified, so as a result, they are being much more cautious on who they lend to. Additionally, some large institutions have filed for bankruptcy, decreasing the lending power overall.

Melissa Mancini, Realtor, CBR, GRI
Web Reference: http://MelissaBMancini.com
1 vote Thank Flag Link Fri Aug 10, 2007
If you are looking for a non-jumbo mortgage (under $417,000) you won't have as hard a time since Fannie Mae and Freddie Mac are still underwriting those mortgages and there are programs out there for first-time buyers making $65,000/yr with no money down.
If you are looking to do something like a no doc loan, or any other non-conforming loan (stated income, etc) or anything above $417,000 then you will have difficulty, no matter what your credit score. This according to my mortgage rep. If you would like more information, email me at dglander@maryholder.com. I can give you his contact information and he will be able to go into more of the details for you.
Web Reference: http://www.dianeglander.com
1 vote Thank Flag Link Fri Aug 10, 2007
Over the last few months the guidelines have continued to tighten due to the mortgage crisis. If the borrower has a high enough credit score there should not be much effect. The more cash down you have the more lenient the lender is as the degree of risk shifts. If you have not conndected with a lender it may be wise to start the process to see what effect the mortgage crunch has on you. Also, you may want to get referral from you Realtor or friends on some lenders they have used in the past. Good luck in your journey.
Web Reference: http://pamwinterbauer.com
1 vote Thank Flag Link Fri Aug 10, 2007
Pam Winterba…, Real Estate Pro in San Ramon, CA
MVP'08
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Yes, it's already happening. ALT-A lenders are all but gone, and 720+ credit is the new rule with full documentation. This is an over reaction to the current mortgage mess, but it will last for awhile until the industry selltes down. The good news; it puts pressure on sellers. The bad news; it makes financing a home more challenging unless you use Federal Mortgage Revenue Bond program.
Web Reference: http://homebuyerservice.org
1 vote Thank Flag Link Fri Aug 10, 2007
Everyone - thanks for the helpful answers and sorry to take so long to come back here.

I live in the Bay Area, so it's definitely going to be a loan over $417. My FICO score is ok, but less than 700, and I went to graduate school so my debt is pretty high. On the flip side, both my husband and I have strong job histories and incomes.

From what you all are saying - sounds like a mortgage at rates that I'd want to pay isn't in my near future. Seems hard to believe given that my situation is a pretty common one in the Bay Area. Sigh.
0 votes Thank Flag Link Wed Oct 10, 2007
If you have strong credit, and stable work history, you will still be able to get a mortgage. Having 20% down will be a more common requirement, but there will still be loans with less than 20% down. As a buyer, if you have good credit, you will be in a stronger negotiating position.

There will be fewer buyers in the market, as a result of tightening guidelines on credit. This will make the pool of buyers left a smaller pool with greater negotiating power.

For sellers, the tightening of credit is not good news since it reduces the number of potential buyers.
0 votes Thank Flag Link Fri Aug 10, 2007
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
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