Here are five ways that mortgage experts say the market is becoming more flexible: 1. Some lenders are easing payment and credit score requirements. Having a modest downpayment or a lower than stellar credit score won’t necessarily keep you from buying a home. Between March 2011 and March 2013, Zillow Mortgage Marketplace saw a 570 percent increase in the number of lenders offering conforming loan quotes with downpayments between 3.5 percent and 5 percent, Lantz said. That does not include the Federal Housing Administration, which allows downpayments of 3.5 percent. 2. Piggyback loans are popping up. The term describes two mortgages taken out at the same time for one property, so a borrower can avoid paying for private mortgage insurance on a traditional loan representing more than 80 percent of a home’s value. Piggybacks also help borrowers avoid higher interest rates on jumbo mortgages 3. Stated income loans are back. These don’t require tax returns to prove income, but they’re also tougher to get than in the boom days, when they were given to people with no or few financial resources and dubbed “liar loans.” “I am starting to see lenders advertising stated income loans, which will be helpful to so many self-employed borrowers,” said Christine Donovan, a real estate broker at DonovanBlatt Realty in Costa Mesa, Calif. “The rates are not great, and it requires higher downpayments, though it seems like a step in the right direction.” 4. Subprime loans are emerging again, but with a change. Before the housing crash, some lenders provided interest-only loans to people with bad credit and no collateral. Lenders entering the subprime market now, however, tend to require hefty downpayments from borrowers, who may have healthy incomes but went through a short sale or took another credit hit before rebounding. 5. Rising interest rates could encourage competition. Lantz predicted rising rates could soften consumer demand and increase the supply of available loans. Lazerson said he sees mortgage brokers and banks imposing fewer overlays in the future.
Posted on: Sun, 21 Jul 2013 15:30:11 +0000
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