Tuesday, July 5, 2011

MORTGAGE & FINANCE: Getting Mortgage Loans Has Gotten Harder

June 19 — Finding an affordable house used to be the toughest part of the equation.
Now with property values in Jackson County about half of what they were six years ago, and mortgage rates remaining tantalizingly low, the most rigorous part of the deal is obtaining the loan
While there is no way to escape the byzantine paperwork, there are plenty of financing programs for buyers who haven’t lost their homes to foreclosure or performed short sales since the real estate worm turned in 2005.

And yes, those ubiquitous radio, television, and online ads about credit scores have a point — your credit score does matter.

“It’s the single most important element nowadays,” says John Mafrici of Park Place Mortgage. “Anything you can do to optimize your credit score can save you a lot of money.”
If buyers can offer up a 720 or better score, they will avoid additional closing costs and long-term financial bleeds.

Conventional loans, where buyers have larger downpayments, cost more if the score is lower, Mafrici says.
“FHA loans are more forgiving with lower scores and that’s why we are seeing more FHA loans right now,” he says. “People don’t often find out their credit scores until they apply for a loan.”
Mike Towery, branch manager for imortgage in Medford, says Federal Housing Administration loans are at 3.5%. Veterans Affairs loans, providing 100% financing, are available for servicemen who were honorably discharged.
U.S. Department of Agriculture rural housing loans, covering 100% of financing with no mortgage insurance, are available anywhere outside the urban-growth boundaries of Central Point and Medford.

“It has a little bit of geographic limitation, but it allows you to buy in Ashland, Eagle Point, Talent, and White City,” Towery says.
There are caps to the program, but a family of four making about $87,000 can get a 100% loan.
“Plenty of people qualify and the great thing about the loan is that there is no mortgage insurance,” he says.
No matter the program, however, everyone has to document incomes, using the past two years’ tax returns, and supply W-2s and pay stubs. Those who are self-employed have to have been self-employed a minimum of two years.
Mafrici noted that a simple thing like a 30-day late notice on a credit card can knock 50 points off a credit score.
One client discovered she was tagged with such a notice even though she had made her payment on time. She got a letter from the credit card company and her score rose 50 points.
“Costs on conventional loans go up in 10-20-point increments and she was able to go up two levels,” Mafrici says. “It was well worth her time to correct it.”

Greg Stiles, Mail Tribune, Medford, Ore.
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