Things have changed since couple of years ago when all one needed was a pulse to ink a housing mortgage contract. Now the heartbeat has to be vigorous and the papers have to be checked twice and three times over. The massive spikes in delinquencies and foreclosure have made the lenders cautious and it seems even after the stabilizing of the housing market they will not change their stand – once bitten twice shy.

One will require an excellent credit score of 720 to 850 to get a mortgage with low rate and fees. Income has to be proved and a decent down payment would have to be made. Shawn Trock of Pan American Mortgage based in Knoxville said, “Either you fit the box or you don’t. There is very little room for negotiation.”
If 20% of the value of the house can be produced in the beginning then the buyer can save a lot of dollars. But if that much is not ready the next alternative is mortgage insurance. This gives protection to the lender in the instance of the borrower defaulting. But it means costs for the buyer.
Mortgage insurance is provided by FHA (government agency) takes an upfront fee calculating to 2.25% of the loan taken. In addition it takes an annual premium that has to be paid per month of 0.55%. There are many private insurance companies that provide similar services and compete with the government agency.
The documents have to be compiled and ready. The lenders are not satisfied until they see everything in black and white. It takes two months for these papers to be verified – statement of bank and investment accounts, last two pay slips and previous two years income tax return copies.

Since the house is the biggest item one can buy in a lifetime its best to do a lot of digging and research. Quotations should be taken from a minimum of half a dozen bankers, brokers as well as credit unions. Keith Gumbinger of HSH Associates said, “These are permanent debts. You need to spend some time being involved in it.”
A lot of weeding out has taken place during the bust of dubitable characters that peddled toxic loans to the naïve and gullible. But despite this there are still questionable characters lurking around to trip the buyers. It is best to be wary about anyone who tends to rush the buyer.

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