Vail Daily column: Myths and rumors of mortgage financing
As a mortgage professional, I spend a lot of time keeping up on my industry. In the past few years, there have been hundreds of changes brought on by dozens of new state and federal laws and regulations. I read online newspapers for my profession, go to webinars, get memos, share gossip with my industry peers and take continuing education and admit it’s still hard to keep straight.
I can only suggest to the consumer to not even try and keep up, and if you are wondering about can you get a loan or what type of loan is best to ask a professional. About the worst thing you can do is ask advice from someone who last got a mortgage more than a year or two ago. Don’t assume that the advice you get from your cousin’s neighbor’s brother-in-law who last got a mortgage in the 1990s is gospel. And don’t assume that your friend who got a mortgage a year ago and makes about the same money you do means that you could or could not get the same thing.
IMPACT OF FORECLOSURE
One point I get a lot of questions about is the impact of a foreclosure, or a near foreclosure on getting a loan. Back a few years ago, a lot of people were struggling with their home loans and many who did not have a foreclosure were so close that they were more than 90 days late.
This event results in a code on your credit report that tells other creditors you reached pre-foreclosure status, meaning the paperwork had been filed, but the default was cured. Generally there is a “9” somewhere on the line on your credit report about the mortgage. This means you were served with foreclosure papers but cured the default prior to a sale. The report may not say “foreclosure,” but it will be viewed as such by future lenders.
Generally you do need to wait seven years after even a pre-foreclosure, although in some instances you might get a loan in as few as three years if you can put 20 percent down and there were extenuating circumstances such as illness or a divorce.
HOW MUCH TO PUT DOWN
Another question I get a lot is: How much does a homebuyer have to put down? The answer to that is it depends, on several things. Low to moderate income buyers purchasing anything but a condo can often get 100 percent financing. Others buying a primary residence can often do so with 3-5 percent downpayment. Second-home buyers will have to put at least 10, and generally 20 percent down. If you find walking in ski boots just isn’t your style and are scouting out cabins up in Bachelor Gulch, then you had best have 30-40 percent for a downpayment for that cozy little mansion hide-a-way.
One other question I get is about interest-only loans. Those were completely gone from the scene for several years, but they are starting to show up occasionally. These loans have been deemed to be “risky” to consumers by the Dodd Frank Act (often referred to in the industry as the “Barney knows Best” act) and as such as dimly viewed by banking regulators, but if you really don’t need the money, I could probably find you one.
IT CAN BE DONE
While getting a mortgage loan is much more challenging than it used to be, it can be done. Our company is actually busier than we have been in some time, and I would attribute that to knowing at least most of the options available for a borrower.
Chris Neuswanger is a mortgage loan originator with the Macro Financial Group Team at Mac5 Mortgage and can be reached at 970-748-0342. He welcomes mortgage related questions from readers. His blog and a collection of his columns can be found at http://www.mtnmortgageguy.com.