Q.  I heard that despite the low interest rates lenders are not lending money and if they are you need to have a credit score north of 750, is this true? -Steve

A.  I know that our politicians and media love to say this but it is simply not true.  The folks who have no direct experience (they are analysts or executives in ivory towers) are the ones often quoted.  In order to get the right information to take control of your finances look for advice coming from those of us that are in the trenches.

On any given day I am working with consumers and the underwriters making the decisions and our experience is much different than what is reported.  We represent several national wholesale lenders as well as local and regional savings and loans and they are lending like there is no tomorrow for both refinance and purchase transactions.  The real issue is not tight access to money but rather decreasing property values.  

Many would be borrowers are either upside down on their homes (they owe more than the house is worth) or their current mortgage is somewhere between 80 and 100% of the home's current value.  Therefore, they are not able to access the best programs that are reserved for those with loans of 80% or less of the home's value.  However, if you find yourself in this latter category the FHA programs may be right for you?  Today FHA is lending to conforming borrowers up to 97% on 30-year fixed rate money in the high 5's and low 6's.  That is cheap money. 

The problem is that the people who want access these higher loan-to-value programs are coming off of interest only mortgages and/or "stated income" or "no doc" programs.  Now they are required to provide full documentation which of course they cannot.  Just today alone, I was able to provide a 90LTV refinance FHA loan at 5.75% saving a client a couple of hundred a month and another 60LTV Jumbo 5/1ARM refinance at 5.375% saving four hundred dollars a month. However, on the flip side I had to turn away 3 borrowers.  One because of lack of income and the other two because their home's values have significantly dropped so one is now upside down and the other is at a 95LTV and it does not make sense to refinance due to the cost of mortgage insurance being added to the monthly payment.

The moral of today's post; don't always listen to what you hear or read.  Use this mortgage check-up form to see how you can improve on your mortgage.  Email me today to see if we can help you or one of your clients?

About the Author: Dave Muti, JD, RMA is the author of Mortgages: What You Need to Know and a Senior Mortgage Planner with Millenium Home Mortgage, LLC located in Parsippany, New Jersey