There is plenty of weeping and gnashing of teeth going on right now about the current tightening of the credit standards in the mortgage business. Here are a couple of things to consider:

1. There are still 100% loans at decent terms and interest rates available. Instead of doing 80/20 loans, they are now mostly 100% single mortgage loans, and they require private mortgage insurance, which adds slightly to the cost of the payments on the loan. However, since there is no 20% second mortgage, which is usually at a higher rate of interest than the first mortgage, the difference in payments is not likely to be that great.

2. Rates are going down slightly on conforming mortgage loans. What? Good news? Yes! Don’t expect to see it prominently displayed in the mainstream media, who is trying to pin a “bad economy doom and gloom” story on George Bush. Whatever you think of our President, he is not responsible for the mortgage and foreclosure issues at hand!

3. If you are a deadbeat, you might be a renter, where six months ago, you could have gotten 100% financing. But, if you have money to put down, sub-prime loans are still available. Be prepared for an in-depth look at your financial situation, instead of a low-documentation situation.

Here are a few articles that might be of use to determining what is going on:

Herb London has an article that puts the situation in perspective.

Roger Schlesinger explains how the “experts” are getting the details in the media wrong.

Roger Schlesinger talks more about sub-prime loans.

Roger Schlesinger again talks about what is going on in the mortgage market.

Roger Schlesinger sheds some more insight on the current problem.

Roger Schlesinger has a satirical look at just “getting rid of” sub-prime loans, and explains how that would not fix anything.


Posted In: NC Real Estate