OUT: ZERO DOWN LOANS STATED INCOME FICO BELOW 600 IN: DOWN PAYMENTS VERIFIED INCOME AND BANK RESERVE FICO ABOVE 700 MORTGAGE: LOANS LENDING CHANGES TRIP UP HOMEOWNERS.Byline: BARBARA CORREA Staff Writer Just last month, Patti Hutchinson and her husband were in escrow escrow Instrument, such as a deed, money, or property, that constitutes evidence of obligations between two or more parties and is held by a third party. It is delivered by the third party only upon fulfillment of some condition. on a $675,000 home in Torrance. They had prequalified for a traditional 30-year loan, had a strong income and agreed to a 5 percent down payment. But then a series of volatile swings hit the stock market as fear about the subprime mortgage market spread. Suddenly, the Hutchinsons' slightly less-than-perfect credit scores turned them into a liability. Their lender said they'd have to up the down payment to 15 percent, and then he raised the interest rate on the loan to double digits Double Digits was a pricing game on the American television game show, The Price Is Right. Played from April 20, 1973 through May 18, 1973's show, it was played for a car and used small prizes. . Adios escrow The Hutchinsons bailed out of escrow, and they plan to stay in their rental house until next year. "We were very disappointed," said Patti Hutchinson, who works at Honda's U.S. headquarters in Torrance. "We took all the right steps to get into something and got prequalified and provided everything possible. I don't know Don't know (DK, DKed) "Don't know the trade." A Street expression used whenever one party lacks knowledge of a trade or receives conflicting instructions from the other party. what else I can do." Battered bat·ter 1 v. bat·tered, bat·ter·ing, bat·ters v.tr. 1. To hit heavily and repeatedly with violent blows. 2. To subject to repeated beatings or physical abuse. 3. by a hemorrhaging mortgage industry, weak credit markets and Alan Greenspan's prediction of double-digit interest rates and recession, prospective homebuyers are watching the rules change overnight. Buyers who had the right combination of credit scores and verifiable employment just a few months ago are now struggling to qualify for loans. Allison Van Wig, a Realtor with Century 21 Landmark Properties in Long Beach, watched two of her clients -- a young couple -- fall victim to the bad timing. Six months ago, they got prequalified to borrow and started looking for Looking for In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. an affordable one-bedroom condo in Long Beach. Ghost mortgages But every time they found something they liked, they found they had just missed a loan program that had shut down, so they were essentially chasing a disappearing market. "We were looking at one-bedrooms, and then found out she was pregnant, and then needed a two-bedroom, which was still OK," Van Wig said. "But by that time we needed 5 percent down. Now, we can't buy anymore." Buyers and borrowers thinking that a prequalification they got months ago will still get them into a home is now one of the biggest challenges for real estate professionals. "I'm trying to encourage clients, whether they are new or are sitting on the fence, that they need preapproval letters saying that this letter is good for 60 or 90 days," said Carol Gilles, a Realtor in Torrance who represents the Hutchinsons. And she advises serious borrowers to update lending prequalifications every 60 days. Loans still out there Lenders are eager to point out that plenty of loans are still out there for borrowers. They just require a bit more documentation and preparation. In most cases, getting a loan in today's market will mean either a higher credit score, higher verifiable income and a down payment, or a combination of all three. One number borrowers should be familiar with, if they aren't already, is $417,000. That is the maximum amount for a single family home loan purchased by Fannie Mae Fannie Mae: see Federal National Mortgage Association. , one of the largest sources of home loans in the U.S. So loans up to that amount will be easier to get than so-called jumbo loans Jumbo Loan Any residential or commercial mortgage with a loan amount exceeding the guidelines of Fannie Mae and Freddie Mac. Notes: Rates tend to be slightly higher on jumbo loans because lenders generally have a higher risk. above $417,000. For most federal programs for loans in that range 7/8 through the Federal Housing Authority or Fannie Mae, borrowers will now need to put down at least 3 percent, said Anthony Olague, branch manager at Provident prov·i·dent adj. 1. Providing for future needs or events. 2. Frugal; economical. [Middle English, from Latin pr Bank Mortgage in Glendora. "So, you need to save that $12,000 on a $400,000 house." First-time homebuyer First-Time Homebuyer An IRA owner who is exempt from the early-distribution penalty (which applies to IRA distributions that occur before the IRA owner reaches age 59.5) for distributing funds from his or her IRA to buy, build, or rebuild a home when having had no interest in a programs that offer down-payment assistance are still available. They have income and home-price restrictions, but the price caps have been adjusted for the recent run-up. Second-time buyers within the $417,000 max now need to put at least 5 percent down, Olague said. He added that 100 percent financing is still available but requires income verification and will cost more than it did. That's all great for those smaller loans. The problem is, in much of Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. , $417,000 still doesn't buy much. Jumbo scrutiny Improved documentation and a stronger financial profile will be even more crucial for consumers needing a jumbo loan. "(Borrowers) over $650,000 are having a really difficult time finding financing, and that's even if you've got the FICO scores FICO Score A standard credit score which makes up a substantial portion of a credit report that credit bureaus sell to lenders so they can asses an applicant's credit risk and whether to extend them credit. and income," said Adlai Hayes, president of On Time Capital, a mortgage lender in Culver City Culver City, city (1990 pop. 38,793), Los Angeles co., S Calif., a residential suburb of Los Angeles; inc. 1917. It is a center of the U.S. motion-picture industry, whose roots in the city date to c.1915. Its chief manufactures are rubber products and computers. . "Right now if you want a million-dollar loan, you can only finance 80 percent up to a million. Before it was 90 percent." Indeed, 100 percent financing on a jumbo loan may not be impossible to find, but it will be tough to find and will cost closer to 8 percent. "100 percent financing is gone," Olague said. "Wells Fargo Wells Fargo armored carriers of bullion. [Am. Hist.: Brewer Dictionary, 1147] See : Protectiveness Wells Fargo company that handled express service to western states; often robbed. [Am. Hist. and Chase were one of the last to do it, and they pulled it a few weeks ago." While lenders closely guard specifics of the loans they originate, it is clear that they have lost their appetite for riskier loan products. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the Mortgage Bankers Mortgage Banker A company, individual or institution that originates, sells and services mortgage loans. Notes: Don't confuse a mortgage banker with a mortgage broker. Association, the adjustable-rate mortgage Adjustable-rate mortgage (ARM) A mortgage that features predetermined adjustments of the loan interest rate at regular intervals based on an established index. The interest rate is adjusted at each interval to a rate equivalent to the index value plus a predetermined spread, or share of lending activity fell to 12.6 in September, its lowest percentage since 2004. ARMS accounted for more than 36 percent of home loans in 2005. Of course, borrowers can find loans, but they have to be able to bring part of the equation to the table. So, for example, if they don't have a credit score above 680, they can count on higher interest or must have something to put down. Good time to buy Still, lenders and brokers insist that now is a great time to buy. "There is inventory available and sellers are becoming more realistic," Olague said. "Yes, prices are high, and some are really stupid," Gilles said. "But there are ways to purchase. Figure out where you want to live and what you can afford. It may have to be close to the airport or close to Gardena. If you don't want to do that -- move to Hemet." barbara.correa@dailynews.com (818) 713-3662 Mortgage tips INCOME VERIFICATION Saying you're a manager at Denny's making $8,000 a month could probably get you a loan six months ago. Those days are over. CLEAN UP CREDIT Small fixes, like paying off a department store credit card that is near its credit limit, can improve credit scores dramatically. Taking a year or 18 months to bring up credit scores is worth the wait. CASH IS KING Colin Robertson Colin Robertson (July 27 1783 – February 4 1842) was an early Canadian fur trader and political figure. He was born in Perth, Scotland in 1783. He originally apprenticed in Scotland as a hand weaver but later travelled to New York City where he found work in a grocery , a former mortgage lender and author of thetruthaboutmortgage.com, suggests setting aside at least three months of assets in a reserve account, and ensuring continuous income for at least two years before applying for a loan. BEWARE OF SCAM ARTISTS There are still lots of brokers and lenders saying they can lend without vital documentation, like income verification. They're lying. CAPTION(S): box Box: Mortgage tips (see text) |
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