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Mortgage Criteria Tightens

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Mortgage Criteria Tightens

Under attack by consumers and mortgage companies, appraisers are taking a lashing in the spill over of the mortgage crisis, which has led to all time record high foreclosures. As a result many appraisers are tightening under-writing criteria and the fall out rate of homes in escrow needing appraisals high enough to obtain mortgages is increasing.

Two proposals in Congress to aid homeowners caught in foreclosure are expected to become law, but not soon enough for many hundreds of thousands of home owners under going foreclosure. Housing Predictor has forecast 3 million homes will be foreclosed through 2009 from the crisis as it spreads from subprime mortgages into conventional adjustable rate mortgages.

The spill over into the conventional market is having a massive impact on investors with credit scores above 700 considered to be excellent credit risks. Many are investors who have purchased real estate in hopes of having a nest egg to retire on in the future. An estimated 5 million adjustable rate loans are due to be re-set through 2009, and lenders estimate that at least a third are held by investors.

No bills have yet been proposed in Congress to aid investors in the mortgage mess, many of whom purchased properties in order to make a profit, and can now not afford to pay the higher costs involved to hold on to the property.

A variety of loans are available in today’s competitive marketplace, including adjustable rate mortgages, fixed rate loans and interest only loans. But subprime loans have all but dried up in the market place as a result of the lack of investors willing to take on the additional risk in the current economic environment.

FICO scores or credit scores as they are commonly called rule the marketplace. In order to get the best possible interest rate FICO scores must be as high as possible. Loan rates are based on these scores. Lenders adjust rates based on FICO scores calculated from guidelines provided by the major insurers of home mortgages. The higher the score is the better interest rate you qualify for on a home loan or refinance.

As a result of this system lending is automated and regimented in today’s marketplace. Already, more than half of all mortgages and home refinances are started over the internet. It's convenient and easy to apply for a mortgage online.

There are all sorts of mortgage products available in today's marketplace. There are loans that provide investors with a lower interest rate to help make investing profitable. Veteran Administration loans (VA) provide no down payment options and Federal Housing Administration Loans (FHA) provide for low down payments to get into a home. Buyers need to meet certain lending criteria to qualify for a loan.

After applying for a loan or refinance lenders are required to provide a Truth In Lending statement to perspective borrowers within 3 days, according to federal law. The statement is an estimate of closing costs the borrower will have to pay at the time the loan closes and includes the interest rate on which the loan is based.

When refinancing a home often times these fees can be included in the new mortgage.

After application is made to apply for a loan, lenders provide the written statement to assist borrowers to get the inside track on obtaining the best mortgage possible. Some lenders require fees to be paid in advance such as an appraisal or loan application fee. Other lenders do not require advance fees to be paid.

The internet has given consumers the power to first shop for a home mortgage online or refinance and then decide which one is best. When you finance a home in today’s marketplace you want to set yourself up to be in a winning situation so the loan isn't too much to handle financially.

Article by Housing Predictor LLC.