No matter what you have heard, whether it is from an "expert" or just a friend, the mortgage industry has changed dramatically with little notice by the general public and many in the industry. August '07 was when the first shot was heard from an industry that had been on a roll for decades, and less than six months later we have a "new ballgame". It wasn't accomplished through Government regulation, consumer advocates or any formal lobby. The ubiquitous "market" made it all happen and we aren't finished yet!
So what did happen? Six months ago everyone could, and most people did, get a Heloc: home equity line of credit. Not only did they get one but they didn't have to pay a thing for it and didn't generally have to qualify for it either. There also wasn't a limit south of 100% of the value of your house. Free is basically gone, qualifying is the only way to get one and high LTV's and lower credit has been replaced by high credit and lower LTV's.
If you had bad credit you simply went and got a sub-prime loan! (That is a dirty word now and besides their not available anyway). The supposed start of all the problems in the mortgage industry has all but disappeared. Most will find it wasn't the biggest problem in the industry, after all, but just the tip of the iceberg.
Conforming loans (up to $417,000 for single family residences on the main land of this country and up to $625,000 in Hawaii and Alaska) and jumbo loans had almost, but not quite, interchangeable rates. In some cases jumbo rates were actually cheaper than conforming rates. Rates are so far apart for the fixed loans in each category that jumbo's are barely mentioned now! And if you do mention them they generally are only available to those with a 680 score or higher.
But arms have survived, especially in the jumbo market. Let me reflect for a moment. Weren't the arms, and especially the interest only arms, one of the major evils of this industry! It is hard to say because unfortunately everyone lumped all loans that weren't fixed for the life of the loan into the one unmentionable category: (hint: second word is prime) loans.
Stated income loans, one of the greatest villains in the current debacle, are surprisingly still available to those with super credit scores. High loan to values, however, are out if you are trying to qualify with these loans. And before I forget you can still get a stated wage earner loan! (Some called these the liar loans). Where is the misunderstanding? Lenders or consumers? We will get to that!
Roger Schlesinger's Mortgage Minute is heard on hundreds of radio stations and daily on the Hugh Hewitt radio show and Michael Medved shows. Roger interacts with his hosts and explores the complicated financial markets in order to enlighten his listeners and direct them along their own unique road to financial freedom.