Overcoming the Mortgage Obstacle

Buying a house may be affordable, but can you get the financing? A question that many individuals and families are asking themselves these days.

Despite historically low home prices and rock-bottom mortgage rates, tight lending standards continue to keep would-be buyers on the sidelines. Higher credit-score requirements and more extensive income documentation requirements have also played a role in discouraging consumers from becoming homeowners.

“The mortgage climate has become a bit more challenging,” says Erin Lantz, director of Zillow Mortgage Marketplace. “The lending community is fairly conservative right now.”

But while mortgage financing is certainly no easier to come by these days, it’s no harder, either. “Borrowers have a little bit of a misconception that you can’t get financing these days. The mentality of ‘It’s going to be too hard for me to get financing, so I’m not going to bother even looking,’ is persistent.”

Credit standards stopped tightening about a year ago, and the most recent Senior Loan Officer Opinion Survey released by the Federal Reserve indicated that the residential mortgage market has essentially plateaued, meaning the lending climate hasn’t become any tighter, but it’s not getting any looser. “On net, standards on prime closed-end residential real estate loans and home equity lines of credit were about unchanged during the first quarter of 2011,” the Fed press release said.

The prominence of government-sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac in the mortgage market has further complicated the picture. Gumbinger estimates that 90 percent of home loans are backed by Fannie, Freddie, or the Federal Housing Administration (FHA). There is virtually no private loan market to speak of. “Because Fannie and Freddie so dominate the marketplace, until they make a move or make a change to loosen, nothing is really going to change,” Gumbinger says.

Mortgage financing may be the No. 1 worry on would-be home buyers’ minds this spring, but there are steps house hunters can take to smooth the way. Educate yourself in the areas of home buying and the process. Speak to several different agents, realtors, brokers, Investors to get more insight as to what may be available out there in terms of fitting into your budget, and scenerio. Be patient and persistent, and you will find that buying a home in todays market is not only feasable, but can still be pleasureable.

*God Speed*

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