New Laws Affecting Mortgages... "The Problem and the Fix"

As we look at the future for whats going on in our economy... the mortgage programs that are available have changed drastically and continue to do so... There are still many options, but for most, the newer laws bring a real imposition!

To compensate for the former problems, most mortgage programs made drastic changes that really hurt the average Joe from being able to get a conventional mortgage. Fannie Mae and Freddie Mac, the major players in setting rules and regulations for mortgages, went overboard. As usual, the way to offset the problem is to create a different problem!

I am sure that you have seen the air conditioning thermostat move dramatically when it is hot or cold... When the temperature is 78 and the thermostat is set on 80... the average person will move it to 60 because you know that it gets colder quicker when its set lower... If you are waiting on the elevator, you can press the button several times to hurry it to your position. It almost always works...

Those mortgage programs for over 100% LTV (loan to value) are basically a thing of the past. With the economy as it is, the housing prices dropping, and the job market declining... it was probably a good thing. The American Dream can wait a few months till a little savings can be saved for down payment or closing costs.

A conventional 100% LTV is another thing that has gone by the wayside... The same arguments can be made here as the prior. Non Conventional mortgage are still available in some situations and areas for 100%.

Conventional 97% loans are extremely rare as well. Even when one can get this program, their rate and their PMI (Private Mortgage Insurance) will be above the cloud level... probably out of our present atmosphere. FHA does have a program in co-ordination with the State of Alabama, to get a 99.5% loan... and a 97.5% on just FHA alone.

Conventional 95% mortgages are available if your credit score is high enough, but again, the PMI and interest rate is going to be a bit higher... 90% and below conventional mortgages are still available but interest rates and PMI are based on credit scores not solely on the down payment.

The next edition will talk about short sales and foreclosures... stay tuned