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Stricter Mortgage Guidelines Are Now in Place
By Sheryl Landrum
CMR Columnist
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In the last few weeks, mortgage brokers have been receiving numerous warnings that underwriting guidelines would be tightening on home mortgage applications. The new mortgage guidelines are out and most of them are directed toward home loans that do not have a twenty percent down payment. What are the new trends in many mortgage guidelines?
- First time homebuyers will no longer be able to do 100% financing unless they can go full documentation and have credit scores of 700 and higher. Maximum home loan limits on first mortgages are also capped at $350,000 which can be restrictive for California borrowers.
- First time homebuyers can go stated income stated assets (SISA) up to 95% cltv if they have credit scores of 740. The maximum loan limit is lowered to $200,000.
- Borrowers that are not first time home buyers will have to meet the same credit score guidelines as above, but are not limited in their loan amounts.
- All borrowers seeking combined loan to value (cltv) of over 80% can expect to find a higher cost to get their home mortgage loan. Depending on credit scores, full-documentation or SISA, and combined loan to value, home borrowers will find an upfront cost, or an increase in interest rates, of .125-1 point of the home loan.
These new guidelines are actually designed to help borrowers stay in a mortgage. In the past few years, too many borrowers needing financing over 80% have ended up losing their homes in foreclosure. These guidelines are designed to prevent borrowers from taking on more than they can afford. However, the best way to ensure a good home loan is to talk to a reputable lender or loan officer; they should be able to guide you to the home loan that is right for you.
About the Author
Sheryl Landrum is a Senior Loan Officer with Charter Funding in Carlsbad, California and a freelance writer specializing in mortgage issues.
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