“Recently, the mortgage industry has received its fair share of media coverage. For better or worse, there is definitely a “credit correction” that is happening at a quick pace. But what does this really mean for me? How will this affect my ability to buy a home? Well, if you have reasonably good credit, verifiable income, and maybe 5% down, then read no further. YOU WILL HAVE NO PROBLEM LOCATING A LOW INTEREST RATE MORTGAGE LOAN. However, if you have low credit scores or cannot verify your income thru tax returns, you will be paying a higher price for a mortgage loan in today’s environment.
There are two basic things that are happening in the marketplace at the moment: a credit crunch and industry consolidation. In laymans terms, there are simply not as many investors willing to loan money to high risk borrowers. Why this change of heart? Basically in the last year, they have gotten “bit” by high defaults, foreclosures, rapid payoffs (much faster than they expected to get paid off) and the overall economy has been sluggish. On top of this, many of these mortgage lenders are not really big companies with deep pockets. They cannot stand up to much loss of profit. Mix all of this into a “pot of chilli” and you have mortgage investors with cold feet as it relates to high risk loans.
The good news in all of this is that major money centers that lend money (banks) have always had higher lending standards and are still offering (better risk customers) great interest rates and a wide variety of programs.
So the next time you turn on the news and see the media focusing on how consumers “cannot get financing”, don’t forget all of the overlooked satisfied homeowners that DID get a fantastic deal on their mortgage. Its still a buyer’s market and really good time to get a deal on a home. Be sure to check out