In talking with mortgage professionals, we often ask, “What are the biggest surprises in today’s mortgage market?” The availability of credit seems to be the most common answer.
Most of the media outlets report how difficult it is to get credit. It has left a big impression on many would-be buyers that it isn’t even worth trying for a home loan.
The reality is that mortgages are readily available, and not just for the people who don’t need the loan. Perhaps the more appropriate way to report the news about mortgage markets is to say that lenders have returned to more appropriate – and more sustainable lending standards. Gone are the NINA (no income, no assets) loans, and for good reason. Those loans never made sense. But normal folks looking to take advantage of today’s great home prices are finding loans are available. Moreover, today’s interest rates remain at historic lows, contributing to the great affordability conditions that now exist.
While the availability of financing is much better than most people assume, a change is coming that will limit some buyers’ opportunities. One of the most widely used mortgage products – the FHA loan – will see a decrease in its loan limit later this year. This government guaranteed loan offers lower down payments for buyers who might not qualify for conventional loans. With a 3.5% down payment compared to 5% down on many conventional loans, it has helped hundreds of people in our community get access to credit.
When the market began correcting a few years back, the FHA temporarily increased the limit on these loans. In Thurston County, the loan limit was raised to $361,250. The limit is set to roll back to $293,250 on October 1, 2011.
Eleven percent of the homes sold in Thurston County this year sold in the $300,000-$375,000 price range, and many of these buyers used the FHA loan to purchase. Buyers interested in a home in that price range would be wise to start shopping for a home before the deadline.
