Credit Crunch! Global Financial Breakdown! Collapse of Wall Street! These headlines are extremely frightening if you are thinking of buying a home in the Minneapolis area any time soon. Where’s the money? The national credit crisis and the stock market worries have led to the perception that it is nearly impossible to obtain a mortgage. Perhaps you are wondering “Am I going to have to give my first-born to get a mortgage to buy a home in the Minneapolis area?” Not exactly, but the days of ‘no down-payment, no credit check, and no income documentation’ are virtually gone.
What type of mortgages are available? FHA loans are becoming very popular again. Over the past few years, buyers, and agents, gravitated away from FHA loans when home values increased beyond the FHA limits and conventional loans became ‘creative’. FHA does not give the loan or guarantee it. FHA insures loans minimizing the risk lenders are exposed to when less than 20 percent is put down by buyers. FHA credit standards are a bit more forgiving and can be used when the buyer has less than stellar credit. Buyers have the opportunity to put only 3 percent down using an FHA mortgage. (The down payment is increasing to 3.5 percent January 2009).
Conforming conventional loans are those that can be resold to Fannie Mae, Freddie Mac and others. The maximum loan amount on these loans is $417,000 and you will probably be required to put 10 percent down. There are some instances allowing 5 percent down payment, but the requirements have been tightened with these loans as well. You will be required to purchase mortgage insurance if you opt to put less than 20 percent down.
What else do you need to do to obtain a mortgage to buy an Eden Prairie home? Unlike a few years ago, when all you had to do was fog a mirror, the lenders are requiring that you provide some documentation verifying your income, assets, employment, debts and you will undergo a credit check. This may sound frightening to you as a home buyer, but “in the olden days” when we purchased our house we had to provide that information before we could purchase a home and we lived through it.
Interest rates on mortgages are still historically low-about the same as the past five years! Banks are happy to loan money! And money is available-as long as you can qualify for it with at least a modest down payment and a decent credit score. If this sounds like it could be you, don’t be afraid to talk with a loan officer. You may well be able to say “Show Me the Money!” and be on your way to owning your new home. For more details about how much home you qualify for and how to obtain financing, please contact me and you will be on your way!
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