Real Estate Column: Will You Qualify for Your Next Mortgage?
by Andrew Ranacis

Will you qualify for your next mortgage? The impact on borrowers from recent mortgage changes
Many clients are calling me to find out how they will be impacted by the recent changes in the mortgage industry on their next refinance or purchase.

The good news is that with good credit, a down payment, or equity in their home and a stable job history, the average borrower will find little has changed. Banks continue to offer low rates and great programs to these borrowers.

A borrower with less than a 700 credit score, little or no money in savings, a spotty job history who is looking for a zero down payment loan may be shocked to find many of the loan programs designed to address these issues are difficult to find. The good news is some mortgage brokers are willing to take the time to counsel them on what the obstacles are and how to prepare them for future home ownership.

Simply taking an extra few months to pay down credit card balances or saving more money for a down payment will make a huge difference in the type of loan you qualify for. First time buyers will also find that state and city agencies are continuing to offer great assistance programs that help make the dream of owning a home come true.

Due to recent changes in the mortgage industry, lenders are taking steps to reduce risky loans. In San Francisco with high sales prices many borrowers relied on zero down or five-percent down loans to get in the door of a new home. This even applied to the best borrowers who are often well qualified but find it difficult to come up with a large down payment on their first home.

Loans that required a zero down payment just six months ago now require ten to fifteen percent down, and in some case twenty percent down. Lenders are also raising minimum credit score requirements; some programs require a minimum of a 730 credit score, higher than the 700 most thought before to be the best.

Lenders are also scaling back on the creative loans such as not verifying income for self-employed borrowers or verifying employment history. Today lenders are requiring more income documentation and requiring borrowers to have more disposable income than in recent years. Borrowers may find the loan program they were pre-approved for recently, while looking for a new home, is no longer available.

This is a good time for all borrowers to go back to your lender and find out if you are still qualified for the program you want. Many times these changes happen so quickly the mortgage brokers are not aware of the new policy. It is a good idea to find out what the lender’s policy is on changes that happen while a loan is in progress.

Working closely with an experienced lender you trust and understanding what is required to successfully close the transaction will make the difference between a positive or negative experience.

Taking advantage of historically low interest rates, less competition in the market place, and an abundance of homes available, you may find the time to buy a home or refinance has never been better.

Andrew Ranacis is a senior loan officer with ten years of industry experience who works with the Home Loan Group. To reach him, call (415) 377-0365 or e-mail ranacis@yahoo.com or visit ranacis.com.

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