Are you finding it hard to look for mortgage loans during these times of foreclosures? Have the loan requirements become too stiff for you?
Mortgage banks have been burned by the avalanche of foreclosures that hit them. Having learned their lessons, they are now tightening their screening processes.
Even so, there are other entities that you can approach for mortgage loans. Oftentimes, they offer better terms. You just have to show them that you have the capacity to pay your loan and your targeted property must pass their requirements. They want to make sure that your current and future financial condition insulates you from future foreclosures.
Here are several recommended mortgage lenders:
The first is the Federal Housing Administration. For decades, FHA has been offering home loans to families with lower income and who are not qualified for conventional loans. Recently, FHA has introduced higher loan amounts up to $625,000. With this new loan limit, FHA loans have been projected by the National Association of Realtors to increase and to account for about one-fourth of all mortgages signed this year.
The new FHA loan model has become more attractive. It requires low down payments, considers the 600 score, removes prepayment fees, pays for closing costs and accepts mortgage insurance fees in place of the 20-percent down payment requirement.
Another recommended mortgage lenders are credit unions. Credit unions have avoided the mistakes that for-profit lenders have committed largely because they had no motivation to enter the subprime market and highly risky investment schemes that caused the flood of foreclosures. Like other lenders, they offer 30-year fixed-rate mortgages, adjustable rate mortgages and hybrids, but make them available at lower rates than the banks. Foreclosures of mortgages originated by credit unions have been relatively negligible.
According to the National Credit Union Administration, mortgage loans provided by credit unions increased by 10.1 percent in the first six months of 2008, a direct contrast to loans from mortgage banks, which decreased by 17 percent.
The third recommended lenders are the Rural Development Housing and Community Facilities Programs of the U.S. Department of Agriculture. If you live in a rural area where there are less than 20,000 residents and your income is below 115 percent of the median income in your area, you might qualify for a rural housing loan.
Lastly, the fourth recommended lenders are local and state housing agencies. Many local governments are offering housing loans to first-time homebuyers, low-income families and employees in government service such as police officers, fire fighters and teachers. Many state agencies even have programs for homeowners distressed by foreclosures. You can contact them through the units of the National Association of Housing and Redevelopment.
John Cutts has been educated in the finer points of the foreclosures market over 5 years. Read articles about foreclosures information at ForeclosureDeals.com - Your online source for foreclosed homes.
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