From the headlines, you might think that lenders will never offer another mortgage.
If you're in the market now for a loan, take a deep breath. It's not that bad.
"It's a little scary, but you kind of have to take it with a grain of salt," said Neil Sweren, president of AllyMac Mortgage Services in Owings Mills, Md. "There is plenty of money out there, even for those people with less-than-perfect credit."
If you're in the market for a house now, what can you expect? If you're not a subprime borrower or looking for a jumbo mortgage exceeding $417,000, you should be able to secure a loan, said Paul Havemann, vice president with HSH Associates, a provider of mortgage information.
Havemann said a mortgage is like a three-legged stool supported by a credit score, assets and income. If all of those are sturdy, he said, you should have "no worries."
Those in the best position are borrowers with credit scores of 660 and up and who can afford to make a down payment of at least 5 percent, Havemann said.
"You have to have skin in this game," Havemann said.
Not long ago some homebuyers avoided making a down payment by taking out two mortgages simultaneously. The first would be for 80 percent of the home's value and the second would cover the rest. Those second mortgages are becoming scarce, Havemann said.
Even if you don't have a lot of money to put down and your credit history is spotty, you still have options under several loan programs.
FHA loans, for instance, are made by private lenders but are insured by the Federal Housing Administration. Stellar credit histories aren't needed. In fact, borrowers with a bankruptcy in their past can qualify under certain circumstances.
The most popular FHA loan is a fixed-rate loan that requires the borrower to make a 3 percent down payment.
Borrowing limits range from $200,160 to $362,790, depending on the region. Market interest rates apply.
Freddie Mac and Fannie Mae also offer loan programs for low- to moderate-income home buyers.
No down payment is needed. You don't have to have a perfect credit record. Each also offers flexible terms for teachers, firefighters, police officers and health-care workers. Interest rates depend on the market. You can obtain the loans through local lenders approved by each group.
"The number [of loans] has skyrocketed over the last few months as things started to fade in the subprime markets," says Brad German, a spokesman for Freddie Mac.
Freddie Mac's Home Possible Mortgage allows you to borrow up to 105 percent of the value of the home. You can get a fixed-rate for up to a 40-year term, or a variety of adjustable-rate mortgages.
To be eligible, your income cannot exceed the median income in your area. But if you are buying a home in an area traditionally underserved by mortgage lenders there is no income limit, German said.
Check outhttp://www.FreddieMac.com/homepossible for more information.
Fannie Mae's program, MyCommunityMortgage, allows consumers to borrow up to the full value of the house.
Borrowers' income cannot exceed the median income of their area, although the program makes exceptions in certain high-cost states, said spokesman Alfred King.
For more information, call 800-732-6643 or go tohttp://www.fanniemae.com (search MyCommunityMortgage).
Those in the market to refinance also will find a mixed reception from lenders.
Charles DiPino, vice president of Universal Trust Mortgage Corp. in Columbia, Md., said his office has been flooded by callers looking to switch from an adjustable to a fixed-rate mortgage.
Subprime borrowers are having difficulties, he said. If their credit records have not improved since taking out the original mortgage they may find that their monthly mortgage payments will be higher under the new loan or they may not be able to refinance at all, DiPino said.
On the other hand, DiPino said, borrowers with decent credit records and seeking to refinance loans under $417,000 are having fewer problems. (Loans over that amount cannot be purchased by government-sponsored Freddie Mac and Fannie Mae, which buy mortgages and package them as securities for investors.)
Eileen Ambrose is a columnist for The Baltimore Sun, a Tribune Co. newspaper.
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