Posted on 14. July 2010 02:42 by qmiskini

This is a tough housing market. Property prices that soared during the housing "bubble" have dropped like a rock since the bubble burst.  Many sellers are paying mortgages on homes that are worth less than they owe, and may be valued at less (meaning negative equity) for some years to come.  There are more foreclosures and distress sale properties on the market than in recent memory.  By some estimates an astounding 12% of all home mortgages are in some stage of default - as many as 7 million home mortgages in default!

For Buyers, there seems to be a lot of "good deals" available. But when you find that good deal, finding a loan to purchase that home is like walking a tightrope in a circus with a blindfold holding flaming torches while being dive-bombed by bees... at least that's how it seemed to one buyer who did finally get his loan but was exhausted and frustrated by the end of the process.  Why is the process so difficult? Because lenders have no confidence in the economy and less confidence in you. As a consequence, lenders, despite ads and ministrations to get you in the door with low interest rates and a variety of new lending plans, look at the economic landscape and continue to make the underwriting process as tough as possible in order to weed out as many future defaults as possible.

That does not mean no loans are available to qualified buyers - people with good credit scores, a consistent work history, money for the down payment and closing expenses, and a property that will appraise at the sale price or more. It does mean even well qualified buyers will have to jump through hoops - prove, verify, re-verify and re-prove their credit worthiness. For buyers whose financial picture is less than perfect it's the tightrope walk for you.  So what do you have to do in order to get a mortgage loan for that good deal?  Homework!

Yes, homework.  Buying a home is actually a business deal... and a pretty big one at that. So if you are not a real estate expert, a significant part of doing your homework is assembling a team of experts to help you through the process - jump through those hoops or walk that tightrope with knowledge, patience and persistence.  Key members of that advisory team are your Realtor and your loan officer. You Realtor will tell you that the most important first step in the process, taken BEFORE you even begin to look at homes, is to work with your loan officer to become a PRE-APPROVED Buyer. Pre-approved means getting, in writing, all the requirements of the lender's underwriters to qualify for a home mortgage loan. Then work with your loan officer and go through the process - right up to the point where the only element lacking is a home that will appraise for a loan. 

You'll get a Pre-Approval Letter from your lender and will have jumped through a bunch of hoops. But when it comes down to obtaining final loan approval for that good deal, there will be no tightrope walk and far fewer hoops.