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Sherrie Faber
DRE #01272361
First
California Realty, Inc.
Sausalito,
CA 94965
Direct:
(415) 339-9200
Fax:
(415) 331-1178
eMail:
First California Realty
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August 10, 2007
Excerpted from CNNMoney.com
Steve Hargreaves
Buyers with good credit, a low debt-to-income, a FICO score of 620 or higher, verifiable income, a down payment of at least 10 percent, and financing for other than a jumbo loan (less than $417,000, which is possible in a few areas of Marin) are still in the market. . . Visit your lender with the above and your tax returns and you may get a good deal.
For the average American looking for a home loan, the crisis in the subprime mortgage market may actually be good news. Tightened lending standards stemming from the subprime crisis likely means fewer buyers, pushing down home prices.
"Not only is it nothing to worry about, it's an absolute positive," said Loni Graiver, president of the Maine-based Cumberland County Mortgage. "Not only have [home] valuations come down, but [interest rates] are still historically low." (Rates on 30-year fixed loans dipped last week, to 6.41 percent.)
Perhaps 90 percent of home buyers qualify for that prime rate, although if you want a rate below 7 percent you probably need a FICO score above 660.
If you're among the 10 percent of the people with credit scores below 620 who need a subprime mortgage, things could get tricky and such loans are being eliminated from the marketplace.
Someone with a credit score of 600 might have to pay as much as 9.5 percent and you can also run into trouble if you're loan is for more than $417,00, the maximum amount that can be channeled through a government lender. Loans over $417,000 are considered "jumbo" mortgages, which have recently seen rates jump due to a perceived increase in risk.
Money for subprime loans is still there, but be prepared to pay interest rates of 8 or 9 percent on them, compared to just over 7 up until recently.
It has become more difficult to arrange loans for clients that don't meet traditional criteria, i.e. a waitress who makes decent money at a high end restaurant, but can't prove it because so much of her pay is in cash tips. Or a professional making nearly $200,000 but who doesn't have money saved for the down payment. |
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