Getting a Residential Mortgage in 2010

 

There is no difference getting a residential mortgage in 2010 as it was in years past other than tighter guidelines, higher credit score requirements, larger down payments, higher costs, longer time periods, and more documentation. The good news is that rates are at a 50 year historic low. There is also a large supply of funds available thanks to the U.S. Government. The biggest changes are:

1) Tighter Guidelines – Full documentation about employment, assets, and liabilities is now required for every loan. Credit score or strong assets don’t guarantee loan approval. You will be required to provide supporting documentation and proof of all aspects of your finances.

2) Risk Based Pricing – Credit scores impact the final rate. Scores range from 350 to 850. The benchmark for the best terms is 740 as opposed to 680. Every 20 points lower could mean a higher rate by as much as 0.25%. The minimum requirement for most mortgage programs is 620 but that is expected to increase to 640 in the coming months.

3) Frequent Program Changes – Loan programs that were available last month may be gone next month. Changes with regard to credit score, down payment and property type such as condos are the most common. This is especially true for low down payment and lower credit score programs.

4) Closer Scrutiny – Everything on the loan application will be verified. This includes printed, verbal and third party verifications. Any discrepancies may indicate loan fraud. Additional explanations or different ways to support something on your credit report or income sources may be required.

Due to constant industry changes, getting a mortgage will require patience. As a borrower, be patient and provide documentation to the loan officer as soon as requested. The entire credit industry is very fluid. Working with a stable, experienced professional is key to obtaining a mortgage that fits your specific needs and parameters.

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Gary L. Solka, Mortgage Banker

Sente Mortgage

Gary.Solka@SenteMortgage.com

512-637-9900

www.SolkaTeam.com