The mortgage market in the U.S. is a mess as lenders implode. That has led to tighter lending standards, which makes it tough for both home buyers and sellers.
The high rate of defaults on mortgage loans has dealt lenders a severe blow. Many have closed offices and laid off experienced workers. The situation has even proved fatal for many mortgage lenders.
The result is fewer lenders, fewer loan brokers and fewer people experienced in underwriting home loans. Potential home buyers are finding it difficult to find a company who will finance a real estate purchase.
Back to Lending Basics
So just what does it take to buy a home in today's financial climate? Simple, it's back to basics. If you have cash for the down payment and a sold credit history you can get a mortgage loan and buy a home.
Yes, I know that's the old fashioned way of lending. Those zero down, 125%, interest only loans might not be a thing of the past, but they have become rare. If you do find one it will be very expensive.
Since bankers were badly burned they have been forced to recall the principals of prudent lending. It now takes more than the ability to fog a mirror to get a mortgage. Today lenders only want borrowers with good credit and reliable income. In addition, they are no longer interested in making loans that exceed the value of the property.
At once time bankers were paragons of responsible lending. Those days are making a comeback!
Look Local
Many of the national mortgage lenders are just a memory. Buyers should now look to mortgage lenders in your local area. Talk to mortgage loan officers at credit unions and small banks. They want your business.
Many of these local financial institutions hold the loans in their own portfolio. They aren't planning on selling the loans as national lenders do, so they have more flexibility in their lending practices.
Uncle Sam Wants You to Own a Home
Your government wants to keep you happy so that you will keep the politicians in office. With that in mind the Federal Housing Administration (FHA) as been empowered to help people buy homes even in these hard times.
If you are a potential home buyer with less than perfect credit an FHA insured loan might be what you are looking for. The FHA doesn't loan money they just insure loans.
There are local mortgage lenders who are authorized to make FHA insured loans. That removes much of the risk from the lender. The government will make good on any loss generated by these loans. Since the lender is protected they want to find borrowers for these loans.
The amount of money you can borrow varies by state. You can learn the state by state lending limits here
Attention Home Sellers
There are something like 1.2 million vacant homes in the U.S. waiting to be sold. That means that if you have a home you are trying to sell you are going to have to do something creative to interest buyers in your property.
One effective tactic is to let buyers know that down payment assistance is available for first-time homebuyers, low-income and moderate-income individuals and families. The assistance is often in the form of a down payment grant.
In some cases the home seller must fund that grant, but it can be a powerful incentive when a buyer is considering the purchase of your home. Plus, you can attract more potential buyers by advertising "No Money Down" or "Down Payment Assistance".
You can learn more about the availability of down payments grants by doing an internet search for these names:
AmeriDream
Nehemiah Program
American Family Funds
Family Home Providers
Futures Home Assistance
The Housing Action Resource Trust
Newsong
Partners In Charity
Responsible Home Ownership
Quickdown
These are private, nonprofit organizations that can help people buy homes using none of their personal cash as down payment. The good news is that most of these programs don't have income limits and don't limit the programs to first-time buyers. Down payment grants will range from 2% to 7%. Each program is a bit different, so be sure to learn about them all.
There's plenty of mortgage money available, you just have to work a little harder to get it.
