Guess What's Returning to the Mortgage Marketplace?
August 29, 2007
I am not really sure exactly when lenders and borrowers transitioned out of loans that required mortgage insurance. In the past 3-5 years as the price of housing rose, FHA loans which require monthly mortgage insurance generally capped out at $362,500 or a maximum purchase price of $374,000 with a 3% down payment. Loans with more than an 80% loan to value required private mortgage insurance. Because consummers did not like the additional monthly charge of mortgage insurance, the mortgage brokers became creative and 100% financing was obtainable through a first trust deed and a second trust deed. In a market of rising home prices this financing worked and generally the borrower had to have good credit in order to qualify.
In today's real estate loan environment, second trust deeds have become harder to obtain and loans with mortgage insurance are becoming a more attractive option for buyers who do not have the cash to put 20% down.
There are other advantages to the borrower to explore the option of a 95% loan to value mortgage with mortgage insurance. First, there is only one loan origination fee rather than the two that would be required for the first and the second. Secondly, it was not always the case that mortgage insurance was tax deductible, but it now is.
The mortgage arena is currently receiving lots of publicity. Is there money available to make loans? What are the guidelines to qualify? Each lending scenario is unique and the very best choice for a borrower's situation is to call a loan officer and explore the options that suit your situation.
I know that Financial 2000, Century 21 Lois Lauer Realty's affiliated lender has experienced changing lending markets in the past. A personal consultation will give you a much better understanding of the complex mortgage marketplace.
I am not really sure exactly when lenders and borrowers transitioned out of loans that required mortgage insurance. In the past 3-5 years as the price of housing rose, FHA loans which require monthly mortgage insurance generally capped out at $362,500 or a maximum purchase price of $374,000 with a 3% down payment. Loans with more than an 80% loan to value required private mortgage insurance. Because consummers did not like the additional monthly charge of mortgage insurance, the mortgage brokers became creative and 100% financing was obtainable through a first trust deed and a second trust deed. In a market of rising home prices this financing worked and generally the borrower had to have good credit in order to qualify.
In today's real estate loan environment, second trust deeds have become harder to obtain and loans with mortgage insurance are becoming a more attractive option for buyers who do not have the cash to put 20% down.
There are other advantages to the borrower to explore the option of a 95% loan to value mortgage with mortgage insurance. First, there is only one loan origination fee rather than the two that would be required for the first and the second. Secondly, it was not always the case that mortgage insurance was tax deductible, but it now is.
The mortgage arena is currently receiving lots of publicity. Is there money available to make loans? What are the guidelines to qualify? Each lending scenario is unique and the very best choice for a borrower's situation is to call a loan officer and explore the options that suit your situation.
I know that Financial 2000, Century 21 Lois Lauer Realty's affiliated lender has experienced changing lending markets in the past. A personal consultation will give you a much better understanding of the complex mortgage marketplace.
posted by shirley harry at 8:39 AM
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