In an recent article titled Real estate here defies U.S. trend, the recent (and ongoing) appreciation of real estate here in the Pittsburgh area is explained.  It confirms to me that despite some rising inventories, based upon simply the season here in Pittsburgh, the rising inventories are simply attributed to that  --- a regular cyclical occurrence given the winter months and it is just as good as time to invest, purchase or refinance in the Pittsburgh area. 

In my recent blog post entry, First time home buyers --- should you buy a home now?   I discussed the issue of buying a house now, and went over several points that led me to believe to be a good time to be a first time home buyer and to purchase.

I'm going to re-emphasize that it is a good time to buy for the first time home buyer.  This time, it's going to be a variant to what I have already stated - planning and your credit score have a lot do with the granting of credit and obtaining the financing as the best possible terms. 

As we have all have heard everywhere, the sub-prime mortgage market is slim.  Although there are still institutions providing this type of financing, financing on this level is provided at a heavy premium.  For example, a recent poor credit borrower, with a lower 500 credit score, was able to obtain an approval for a loan, however, the interest rate was in the double digits AND they were required to put 20% down, plus have the closing costs, ouch!

While financing options and low rates remain available to those with good to excellent credit, with the collapse of the sub-prime market and its continuing fallout, credit standards will become more stringent, as investor will be constantly reminded of the fallout.  So what does this mean to the first time home buyer or for that matter, someone who is upgrading or has a need for financing --- careful planning will be necessary to get the best case scenario as far as financing goes and obtaining the best possible interest rate since the market will continuously conscience of this fallout.

Already, Fannie Mae is applying new loan level price adjustments ("LLPA") that apply to mortgages with combinations of "risk characteristics" that include credit score, range of loan to value ("LTV") and subordinate financing that relates to credit scoring and payment and amortization features of products and two unit properties.  It is expected that these changes will take place in December 2007, and some lenders have already implemented these LLPA's .

What does this mean?  Well, those potential first time home buyers with lower credit scores will be paying a premium for borrowing money should the LTV be higher than 70% and having a credit score under 680. OK, so now what??  Now its not all bad news! The My Community Mortgageis not affected by this most recent LLPA!  I'm going to do a post directly explaining My Community Mortgage and there are some really great features to this option.

            OK, so careful planning - continue to know and monitor your credit score before and during the loan process so that financing can be obtained on the best possible terms for the borrower. 

Michael J. Sally

http://www.mortgagesbymike.com/