Susan: Are banks still lending money? I hear all the time that financing is very difficult to get.
Brandon: Great question, Susan. Yes, banks are still lending money! What we are actually seeing is that banks are going back to standard underwriting practices that were done in the late 90’s. In the Housing boom lenders and banks went wild changing guidelines to fit most anyone into a mortgage. They forgot to think about risk and how many clients would actually pay the mortgage on time. They found out not everyone will pay on time and credit score and loan application information does mean something.
Banks have tightened up mortgage approval guidelines but to be honest it is still easier to get a loan today than it was in the 90’s. Borrowers must show a consistency of paying bills on time and working a full time job. There are a few basic options for clients to fit into a loan program that are listed below:
Loan options:
· USDA: 100% financing option with income limit of $73,600 to $75,100 for 1-4 family members and 5-8 family members is 97k total income. That means you can still get a 100% loan if you make less than $75k income in most case and pay bills on time.
· VA: 100% If you make more than $75k and are a veteran you can still get 100% financing with a VA loan
· FHA 3.5%: If you do not meet the above criteria then you would need 3.5% down. The maximum loan amount for this option is $271,050.
· Conventional : 5% down- If you don’t meet any of the above you can still purchase a home with 5% down.
If you don’t meet any of the above loan options it is pretty safe to say you need to wait a little while save up some money for down payment and purchase in the future. Always check with a lender who offers a free consultation (Alcova does this) so you can figure out exactly where you are at, what you need to do and when will be a good time to purchase. Even if you are just thinking about it, let’s talk and help you figure out all the pieces to the puzzle.
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Brandon is a branch partner at Alcova Mortgage. He enjoys doing his taxes, firewalking and competitive eating, but not necessarily in that order. You can reach him at brandon@alcovamortgage.com, or 877-552-7150.