Home Buyer's Recession Survival Guide - New Initiatives To Help Get You Approved

Even in the shadow of the foreclosure nightmare, there have been some developments that can help buyers get into homes. Some of the major new initiatives include:

FHA limits are up, way up. The FHA has finally woken up to the fact that half a million dollars may just buy you a starter home in some markets and has tied the loan amount maximums to the local housing costs. The new limit is now 95% of the regional median of house price, or 75% of the Fannie Mae maximum, whichever is lower. It is worth your while to check out carefully as it can open some avenues for you which you may not have previously considered.

Finance your closing costs. Another change in the FHA rules is that you can now finance right up to 100% of your closing costs. This is of significant advantage to the applicant who is really short on cash.

Down Payment Assistance Programs are back! Qualifying for assistance with your down payment was somewhat akin to running a gauntlet and then being told at the end that "we were just kidding." Some Mortgage brokers now have access to significantly streamlined qualification processes for these programs and you should make sure that you get all the information on them.

Approval has sped up. Mortgage lenders have realized that they don't need to chisel their calculations on stone tablets any more and have discovered computerized loan approval, which scores the credit factors and comes up with a risk percentage of default. Anyone scoring below a certain point gets the loan. Simple as that. Ensure that your Mortgage broker uses these lender programs, as it can critically diminish the turnaround time.

Over the past few years, Second Mortgage rates had been so affordable that in some cases they were less expensive for the buyer than the alternative of Mortgage Insurance. The Home Equity Line of Credit (HELOC) rate which was being applied stood at 7.25%, and when you took into consideration your particular margin you were usually getting about half a point knocked off, so you're standing at 6.75%, which was an extremely advantageous one in that market.

Unfortunately with all the recent problems with foreclosures to people who have gotten in over their heads with Mortgage financing, the Mortgage lenders are starting to spike the Second Mortgage rates to a point where they will become unpalatable to most buyers. Some lenders have set Second Mortgage rates at 15%! What they want the buyer to consider is to wrap the whole financing package into one Mortgage, a first, which takes into full consideration both the property's and the buyer's value.

There are a lot of Mortgage lenders that were flying high just a year ago offering Second Mortgage that are in bankruptcy court today. The reason is simple: Buyers were looking at Second Mortgage as a way to patch up the hole left by the first Mortgage. What happened when these buyers could no longer make payments was that the first Mortgage holder came in and swooped up all the value and the Second Mortgage holder got caught holding the bag.

There are various alternatives to a Second Mortgage. FHA Mortgages are still approving people with reasonable-to-low credit scores and with a down payment as small as 3%. If your credit score is as low as 580 (which is pretty low), you may be able to qualify for a conventional loan at 100%, albeit with Mortgage insurance as an obligatory adjunct. The best thing you can do is to speak to your Mortgage professional about the options that are replacing the time-honored Second Mortgage and work out which is best for your particular financial needs.

Read The Entire Survival Guide

Home Buyer's Recession Survival Guide - The Subprime Meltdown
Home Buyer's Recession Survival Guide - The Advantage Of Renting Over Buying
Home Buyer's Recession Survival Guide - Why Rent? Why Not?
Home Buyer's Recession Survival Guide - Five Common Mistakes House Buyers Make
Home Buyer's Recession Survival Guide - Get Your Home Sold Quickly & At Your Asking Price
Home Buyer's Recession Survival Guide - Improve Your Home's Value And Sell It For More!
Home Buyer's Recession Survival Guide - Learn The Value Of Curb Appeal
Home Buyer's Recession Survival Guide - Home Staging: Valid Selling Technique Or Fraud?
Home Buyer's Recession Survival Guide - Before You Go House Shopping
Home Buyer's Recession Survival Guide - The Home Condition Checklist
Home Buyer's Recession Survival Guide - Getting A Mortgage From Different Types Of Lenders
Home Buyer's Recession Survival Guide - What To Do After You're Turned Down
Home Buyer's Recession Survival Guide - New Initiatives To Help Get You Approved
Home Buyer's Recession Survival Guide - Isn't HUD An Old Paul Newman Movie?
Home Buyer's Recession Survival Guide - Jumbo Isn't As Huge As He Once Was
Home Buyer's Recession Survival Guide - FHA Q&A
Home Buyer's Recession Survival Guide - The FHA's Credit Requirements Vs. The Bank's
Home Buyer's Recession Survival Guide - Your Credit Score And Your Mortgage
Home Buyer's Recession Survival Guide - Credit Score Confusion
Home Buyer's Recession Survival Guide - Keeping That Credit Score Nice & High
Home Buyer's Recession Survival Guide - Minimize The Interest Payable
Home Buyer's Recession Survival Guide - What Is PMI & Why Do I Care?
Home Buyer's Recession Survival Guide - The LIBOR-COFI-COSI Alphabet Soup
Home Buyer's Recession Survival Guide - REO: Get Rich Quick Or Just Waste Time?
Home Buyer's Recession Survival Guide - Obtaining Flipping Money
Home Buyer's Recession Survival Guide - Consider The Additional Costs
Home Buyer's Recession Survival Guide - What Is Escrow?
Home Buyer's Recession Survival Guide - Tips To Avoid Foreclosure
Home Buyer's Recession Survival Guide - The Changing Value Of Your Mortgage Dollar
Home Buyer's Recession Survival Guide - How To Ride The Interest Rate Spikes
Home Buyer's Recession Survival Guide - Can't Get A Mortgage? What A PITI!
Home Buyer's Recession Survival Guide - Calculating Your Closing Costs
Home Buyer's Recession Survival Guide - Mortgage Broker or Mortgage Banker?
Home Buyer's Recession Survival Guide - The Magic Of A Down Payment
Home Buyer's Recession Survival Guide - A Refinance Checklist
Home Buyer's Recession Survival Guide - Refinancing With Bad Credit
Home Buyer's Recession Survival Guide - The Self-Employed Mortgage Maze
Home Buyer's Recession Survival Guide - VA Loans
Home Buyer's Recession Survival Guide - Offset & Reverse Mortgages
Home Buyer's Recession Survival Guide - The Reasons To Not Buy An Offshore Retirement House
Home Buyer's Recession Survival Guide - How To Pay Less Than $500 A Month
Home Buyer's Recession Survival Guide - Five Easy And Cheap Tips To Save Big $ On Energy

More by this Author


Comments

No comments yet.

    Sign in or sign up and post using a HubPages Network account.

    0 of 8192 characters used
    Post Comment

    No HTML is allowed in comments, but URLs will be hyperlinked. Comments are not for promoting your articles or other sites.


    Click to Rate This Article
    working