With all of the talk recently about a mortgage credit crunch, many folks are wondering what loan programs remain. More importantly, many people want to know what kinds of loan programs will be available to them when they go to refinance or purchase a home in the future. We will take a look at what low down payment mortgages still remain and what loan programs are still available for different borrowers.The mortgage credit crunch has affected all aspects of non conforming residential and commercial lending, however the market is better than it has been in quite a while for "conforming" loans, namely those which are less than $417,000 in most states for a single family residence (higher in Alaska, Hawaii and also higher for multi family properties) for borrowers with good credit and verifiable income.
Generally, mortgages are packaged together and sold to hedge funds, banks, and other investors in the form of mortgage-backed securities. Recently, there has been widespread concern as to the actual value of many of these securities. Many former buyers of these securities are not purchasing mortgage backed securities, causing a glut in the system and a liquidity crunch.
The mortgage credit crunch will ease in due time after banks and investors are satisfied with the repayment of purchased loans. This will take some time and most major lenders are originating mainly GSE backed loans.
The mortgage credit crunch will affect most borrowers going forward. Lending standards are increasing and will require more documentation of your finances and a higher down payment than in the recent past.
Most mortgage companies are looking to sell the bulk of their portfolios to Fannie Mae and Freddie Mac because of the mortgage credit crunch. Many of the "exotic" loans such as no-income verification neg am loans at high ltv's have gone away. Many of the not so exotic loans, such as jumbo loans and piggyback second mortgages, have also been affected by the mortgage credit crunch.
Other programs not affected by the mortgage credit crunch are the Government Backed loans such as FHA financing and VA financing. These two loans are great programs for first time homebuyers or for those looking to refinance their home. Loan limits apply, contact your mortgage professional for details.
