Do you have questions about what financing would be like if you were to move downtown? Do you watch the news or read the news online and wonder what’s going on in the mortgage industry?

Well–you’re not alone. Our finance expert, Benjamin Morrow, was kind enough to answer some of the questions we have been asked about this very subject. Since he’s our expert, and an expert in the industry, it would make good sense for him to be the one to answer these very questions!

So what did people want to know?

• How is financing a loft/condo or urban living space different from obtaining a mortgage on a single family home?

From a lending perspective, there are differences between a single family and a condo/loft. When you purchase a home, you own the land the home is on, the home itself and basically everything from property line to property line. When you purchase a condo/loft, you only have exclusive ownership of the interior of the unit. All the walls, common areas and the facilities are shared with the other owners in the complex and managed by the Home Owners Association. A lender will take these items into their risk analysis, as well as the number of stories and the health of the association budget to name a few. With that said, the condo/loft market has exploded over the last couple of years and financing for them has evolved with this growth. We have access to literally thousands of different programs that can be used to purchase a loft or condo and can be tailored to someone’s specific situation and the project as

• What is the biggest change that has occurred in the last 90 days in the mortgage industry?

There have been many, many changes in the last 90 days, but one of the biggest is the lack of capital on the secondary market to fund loans. Many people are calling this the “credit crunch” and not many have been unaffected. What happened was, the investors who were funding our mortgages for the last couple of years started to see their loan portfolios start to default more often. When this happened, they started pulling the money wholesalers were using to fund the loans. The amount of programs cut has been an enormous and a large number of lenders have closed their doors. What that means for the buyer is there are fewer programs to use and narrows the pool of people who can buy.

• How will that change affect purchasing a new home?

The biggest affect is less people can buy homes. Late last year you could easily buy a home with no money down and a 580 credit score. Now you must have roughly a 620 and the rate is much higher and many programs even want a 640. The default rate on 100% financing has caused many zero down program rates to go through the roof. Lending guidelines have become much more restrictive, but there are still many options for buying or refinancing a home.

• What is the typical down payment required today?

You can still get a loan for zero down, but your rates are going to be better if you put at least 5% down. When you see a quote for a rate, generally it is for 80% down. That is how everyone advertises because those are the best rates available.

If you have any other questions, or if you’d like to talk to someone about purchasing a new home be sure to contact Ben. He can be reached via email or you can call him at 515-309-1221.