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Another nail in the coffin of 100% financing

By Ken Horst

Mortgage and Lending with MLS Maps, Agentopolis, Tweet Me Homes

March 27, 2008 08:25 AM

As of April 1st Countrywide will no longer be offering 100% financing. The maximum LTV (loan-to-value) has been reduced from 100% to 97% and the minimum qualifying credit score has been increased from 660 to 680 points.

This change affects all conforming Programs including Flex 100, House America, and My Community.

This is bad news for conforming borrowers but doesn't affect anyone who qualifies for FHA as it is still possible to get to 100% financing with an FHA loan to 97% and a 3% gift from a down payment assistance fund like Nehemiah.

I think we will being seeing more lenders match this change in the very near future and ultimately there will be very few if any lenders offering 100% financing.

If you are in the market to buy a home and you don't have any money for a down payment I highly recommend that you don't waste any time.

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Lenn Harley

Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA

Real Estate Broker - Virginia & Maryland

The more things change, the more they stay the same.

In the mid 80s to late 90s, that's all we had. The less than 5% is a recent phenomenon.

Folks will have to find some money.

Mar 27, 2008 08:32 AM

Brian Schulman

Coldwell Banker Residential Brokerage, Lancaster PA - Lancaster, PA

Lancaster County PA RealEstate Expert 717-951-5552

Thanks for the heads-up, Ken. If most of us weren't Realtors, we would probably agree that nothing down isn't a great idea, anyway.

Mar 27, 2008 08:35 AM

Konnie Mac McCarthy

MacNificent Properties, LLC - Cobb Island, MD

Broker/Owner - VA & MD "Time To Get A Move On!"

680 credit score....that's whew...is that even for Fha loans.

Mar 27, 2008 11:22 AM

Ken Horst

MLS Maps, Agentopolis, Tweet Me Homes - Minneapolis, MN

You're right Lenn,

When I bought my last two homes, many years ago, I had to come up with a 10% downpayment. My how times and expectations have changed.

I think the old way is better for the economy and home owners overall, but I think it will be a very difficult transition for the real estate and mortgage industries as far fewer people will qualify to buy a home.

Mar 27, 2008 04:52 PM

Brian,

Even as a loan officer I questioned whether 100% finaincing on a home was a good idea. Frankly I don't think it should have ever been available to home buyers but the bigger problem we face today is that if all the 100% purchasers disappear, who will be left to support the first time home buyers market and give provide second home buyers with the money they need for the down payment.

I think the whole industry is in a pickle and I think most of us know that it will get worse before it gets better.

Again I have to say, thank God for FHA and down-payment assistance programs.

Mar 27, 2008 05:01 PM

Konnie,

680 is getting up there a bit from what we have all been used to. I remember the days when there was almost no one you could march into my office that I couldn't get 100% financing for. 680 is obviously a safer score for an investor in mortgage backed securities (MBS) It's too bad Wall Street and the housing industry strayed so far from what we all knew was common sense.

Ken

Mar 27, 2008 05:09 PM

Marzena Melby

Coldwell Banker Burnet Realty - Richfield, MN

Realtor, Twin Cities Minnesota Real Estate

Hi Ken ~~ It is reasonable to require a minimum credit score. As a REALTOR, I counsel my clients regarding the 100% financing and what it means to them, especially if they are not sure how long they will own the property.

Good post!

Mar 31, 2008 07:35 AM

Thanks Marzena,

Your right about the minimum credit score. I think the lowering of the minimum credit score over the past few years has really contributed to the current mortgage debacle. There will be a lot less business for mortgage people going forward but the quality of the loans will go up dramatically.

Mar 31, 2008 09:32 AM

Another nail in the coffin of 100% financing

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Ken Horst

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