Business With Greg Mortgage and Real Estate Blog

With the collapse of sub-prime lending many loan products vanished. However, most of these products were doing a short term benefit with a long term catastrophy.

Most loan officers were forced to put customers into an FHA, VA, or USDA loan. These loans are very good loans with low interest rates and helped keep things going for most home buyers and help people with refinancing.

President Bush announced the FHA Secure program to try and bail out those who could no longer afford their mortgage due to an increase in their adjustable rate mortgage.

Then this past month more bad news. The PMI companies stopped insuring 100% mortgages. As a result the Fannie Mae and Freddy Mac 100% programs cannot be insured so they are no longer available.

Then these past 2 weeks we were bombarded with an effective immediately memo for FHA mortgages. Most companies will no longer do an FHA loan that is NOT approved by Desktop Underwriter. So, most people with credit blemishes who have a credit score lower than 580 cannot get an FHA or even a VA mortgage. This eliminates the possibility of borrowers using FHA Secure in most cases as well.

The only true 100% financing left is USDA and VA. About half the lenders offering USDA impose the credit score minimum on that program too.

 I knew this all was going to happen sometime this year. What you buyers need to know is how to buy a home. You may need a down payment. There still are a few ways to come to a closing with no out of pocket money. Also remember that a 401k can help you with a down payment that is not subject to an early withdraw penalty.

Also, remember that houses located in declining markets will require additional money down or further lending restrictions of -5% LTV.