Questions and Answers for Colorado Mortgage Holders, Borrowers
Thinking about applying for a Colorado mortgage? Already an owner in this housing market? Consider the following questions…
What can you expect if you are seeking a conforming mortgage that is sold on the secondary mortgage market to Fannie Mae or Freddie Mac?
You’re set if you qualify for an ordinary loan. Rates are still low, and there’s no shortage of them. These loans account for about 80 percent of the market, industry experts say.
However, some lenders caution that could change, so you’re better locking in now, rather than hoping rates will drop another eighth of a point.
What if you are trying to get a loan through Countrywide, or some other struggling lender?
There’s a good chance the deal won’t close as scheduled or the home loan lender will demand a much higher interest rate or as much as a 30 percent down payment, especially if you are self-employed.
You should work closely with your mortgage broker or mortgage banker to find alternative financing. Lenders are quickly stepping up, offering innovative programs to fill the void.
What if you are trying to take out a nonconforming loan, or jumbo loan (the cutoff is $417,000 for conforming loans in the Denver housing market)?
Even if you have been pre-qualified, go back to your lender to verify that you can still get a loan. Lenders are tightening their qualifications and scrutinizing documents more carefully than they have in years. Also, in some cases, rates are going up and requirements such as the amount of the down payment are changing.
What if I no longer qualify for a loan?
Clean up your credit scores by doing things such as paying off credit card debt to make it easier to get a loan in the future.
Also, you might get a first loan up to the $417,000 limit for a conforming loan and a second on the remaining debt. If you’re close to the $417,000 cutoff, try to come up with enough money to bring the loan amount down to that level.
What do I need to qualify for a loan in this market?
The better your credit history, the easier it is to get a loan and one at a lower rate. So-called no doc loans are being replaced with loans that require proof of your income and work history.
What does all of this mean if you are trying to sell your home?
Expect homes to languish even longer, especially in areas where home builders have a lot of land for construction.
Is now a good time to take out a home equity line of credit?
If you do so, make sure you are charged interest only when you borrow against the credit line. And make sure you”re using the money for something that makes economic sense. Now is NOT the time to use your home as an ATM machine.
SOURCE: The Rocky Mountain News