Obtaining a Mortgage


With the tremendous losses experienced by the mortgage industry, it is true that some of the lending guidelines have been tightening up. Lenders have slightly increased their credit score requirements and many are requiring a 10-15% downpayment on a conventional loan here in Rochester. However, many programs are still out there — especially if you’re a first-time home buyer — that may be less stringent.

One of the best things you can do to prepare if you’re in the market to buy (aside from hiring a Nothnagle agent!) is to get pre-approved for a mortgage. Pre-approval has more significance than a pre-qualification. Nearly anyone can get a pre-qualification letter; a pre-approval letter is only issued after the lender has run a credit report and verified your financial circumstances. A pre-approval letter may also provide you with some conditions that must be met in order to obtain a mortgage. One common example would be if you own a home now, your lender may condition a mortgage approval on you selling your home first before they will lend you money for your new home.

Rochester continues to fair well, especially in comparison to other parts of the country. I have read stories of some borrowers being required to put 20%+ down in parts of the country hardes hit by the mortgage/foreclosure crisis. The issue being that in some of these areas that experienced tremendous appreciation and inflated price, if a buyer had a low downpayment coupled with plummeting home values, it makes it much easier to “walk away” from the property and go into foreclosure. The buyer doesn’t have much to lose. By requiring a substantial downpayment, it makes it more difficult to simply walk away because a borrower may not want to lose a substantial cash investment.

One response to this post.

  1. Although a loan does not start out as income to the borrower, it becomes income to the borrower if the borrower is discharged of indebtedness.

    Reply

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