Getting a Mortgage in 2012

Unconventional Borrowing 101 

 In August 2007, the subprime melt-down was a big topic. Now that the lending industry has tightened up again, we are hearing potential borrowers talk about how confusing getting a mortgage is in today's economy. Some think no one can get a loan with less than 20 percent down. Some think that anything goes, if you know the right lender. Here's where we stand in 2012: Prime Lending Rate is set nationally. It is the base rate of all loans. Residential mortgage rates are higher than that prime lending rate. The subprime residential mortgage rate will be even higher than conforming residential mortgage rate. This is reasonable, because non-conforming lenders are taking more risk. The opposite of "subprime mortgage" is not "prime mortgage"; it's a "conforming" mortgage. To get a conforming (or conventional) loan, borrowers must conform to rigid standards developed by mortgage underwriters at FNMA or FDMC, the two big national mortgage companies. Non-conforming loans do not conform to those standards. There are local banks and credit unions that hold their loans. They are non-conforming, but usually called "portfolio lenders." Conforming loan standards are not exact; there is some judgment involved. Since the meltdown, room for judgment is pretty small. An applicant is judged on these factors: income to support the requested mortgage plus all other outstanding debt, credit history, job stability, and assets. It was possible, in 2007, for someone with an unsteady job to still get a mortgage if he/she had good credit history, a good income, and a hefty down payment. NOW, there are a variety of loan programs available. For more information email me at nrw_kwrealty@yahoo.com or call 508.737.3567...