Buy a Matthews NC Home: Mortgages Then and Now
Getting a mortgage was the easiest part of the home purchase just two years ago. Now it has become the most difficult for many people. Both buyers who want to purchase and sellers who are receiving offers on their property need to understand the changes.
Then: Many loan products required no verification of income, assets, or even a job.
Now: Stated income loans are history. Full documentation is required for every loan. Self-employed people must provide two years of tax returns to document income.
Then: Borrowers used 80% first mortgages coupled with 20% second mortgages to avoid private mortgage insurance and making a down payment.
Now: Borrowers are limited to 80% firsts with 10% secons and 10% down to avoid PMI. Unless you are eligible for a VA loan, there are no 100% mortgages. Conventional loans with a 3% or 5% down payment are available but require private mortgage insurance.
Then: Reasonable interest rates were available to just about everyone regardless of credit score.
Now: Risk-based pricing rules, which means that a borrower will pay additional discount points to get the best interest rate depending on credit score and down payment. A 720 score is the minimum required for avoiding added discount points.
Now more than ever, a home buyer's first step is to get pre-approved by a mortgage loan officer.