It is harder.

I had a client that was supposed to close yesterday... they didn't listen to me and thought that "when banks compete, they win" only to find out that the lender kept making excuses and we did not close yesterday.

Today we are switching over to a lender that I recommend. The rate is about the same (different, but better actually) and they will close the SAME DAY.

So yet  it matters where your loan is from.

Frank

Broker FranklyRealty.com

For the best rates, it seems 720 is the cutoff.

Agents/brokers, do you provide a disclosure of any affiliation and compensation derived from the relationship with any lender or mortgage broker your recommend?  Thanks for any insight.

If you have a decent credit score, 700 plus, and a 20% down payment plus income you can document, getting a conforming loan 30 year fixed up to $729,750 in the Bay Area is easy.  If you want a jumbo loan then be prepared for a large down payment of 30% or more and settling for a 5/1 or 7/1 ARM to get a decent rate.

There is still money available...that could change but it would take one heck of a system-wide banking failure for funding of conforming loans to dry up completely.  Jumbo loans are different creatures.  There are lenders who retain their Jumbo oans in their portfolio--they don't sell them on the secondary market like most lenders.  These lenders have continued to make Jumbo loans at decent rates for 5/1 and 7/1 ARMS even as other lenders pulled completely back from the Jumbo market.  We will know we are deep trouble when these "portfolio" lenders pull back from the market.  So far they have not; they are still making loans at decent rates.

btw, I've closed four loans in the past week so yes, I have experience.

What a difference a month makes.  I closed on the 28th of August.  VA loan, no downpayment, seller paying closing, and my FICO was less than 670.  6.75% interest rate, a little over 7% APR.

Today, I don't think anyone would touch me.

I don't think dumping $700 billion over the next few years into the market, primarily the real estate market, is going to change the situation that much.  The people who have homes that are overpriced are still going to have homes that are overpriced, people who *can* get loans will find a home that they can afford, either a foreclosure, or someone who is willing to take what they can to get out, or someone who realizes that their home isn't worth what it was, and is willing to face the reality of the situation.

Even if there is more liquidity in the financial sector, the banking industry is still going to be wary of those individuals like me who have lower FICO scores, and will either not lend to that group of people, or will lend at higher interest rate.  Which is just as bad, because people will want to get a home, may not be able to get all the house they could have a year ago, but are willing to put themselves in a situation that they struggle to afford what they can get.

Even a $100 a month difference in loan payments could be the dividing line between making it and not making it.  That's easily represented by fractions of a percentage point on loans.

I consider myself fortunate to have bought when I did, for the next five years I may not be able to.

There's a commercial on now about some credit reporting agency, and this kid who buys a fancy car because he watched his credit rating 'like a hawk.'  I think that we all need to be much more aware of our credit rating, and what it's going to be doing to us down the road.  Right now, if you don't have a 700 or more on your FICO, you're going to be hard pressed to get a 'decent' loan.

Gary

GaryMC,

You are right about watching your credit score.  Buyers can still get loans with scores in the 600's as long as they can document income and have pretty decent credit overall.  It's just that the rate will be higher than it would be if they had a score in the 700's.

I have a few tips that might be helpful.

1. Keep you old credit cards active.  Old cards with a good payment history help your score.  Closing an old card with a good payment history will hurt your score.  Closing a new card will not help though.  Don't bother cancelling cards if you think it will help your score; it won't.  Above all, keep those old cards.

2. New cards or other applications for credit  hurt your score.  When the cashier at Macy's asks if you want a new credit card to get a 10% discount on your purchase--say NO!  (If you plan on buying a home soon.)  Same goes for those "No payments for 6 months" deals.  Those are really an extension of credit.  Opening a new credit line hurts your score but closing it, even immediately, won't help.

3. Don't go buy a new car just before you apply for a loan.  You would not believe how many people do this.  Then they wonder why the either don't qualify for a loan or don't get the best possible rate.

4. A mature mix of debts is good for your score.  A mix of revolving, installment, and mortgage debt is best.  Mature though is the key word.  You need a history of successfully paying your obligations.

5. High limits on credit cards are good, high balances are bad.  A high limit is a sign that you are credit worthy.  A high balance relative to the limit is a sign you may be overextended.

6. Per 5, it's the ratio of the balance to the limit that matters.  a $300 balance on a card with a $300 limit will hurt your credit more than a $3,000 balance on a card with a $30,000 limit.  In fact, that $300 balance might be costing you 20-30 points on your score.  It's the ratio that matters.

7. Keep your balances below 30% of the limit.

8. Do not pay off collections before close of escrow.  If you have a collection on your credit report it will age and have less and less impact on your score relative to other factors.  If you pay off the collection then it becomes current and will cause your credit score to fall, often dramatically.  Lenders can live with collections when they underwrite your loan but they may require you to pay them off depending on the amount and the type of creditor. (They tend to ignore medical collections--but don't count on it ok.)  If the lender requires you to pay off a collection do it in escrow; the lender will be ok with that.

9.  This is just my 2 cents and it's a bit of a digression but it's common enough that I'll include my observation here.  Paying off a collection that you think is unjust might rankle you, and rightly so.  You have a choice though of living in a home you own or living with righteous indignation.  I'm not saying it's fair.  That's just the way it is.  For most people the home has more value than the indignation.  Pay the collection--in escrow--and get on with life.

10. Tailor these points to your situation.  If you have an 820 credit score and make $500,000 per month--go buy the Maserati.

In regards to Palo Alto's #2, all I can say is 'Oh YES!'

From experience.

My lease renewal was the end of August.  I made an offer at the end of July, and wasn't going to pay more than what I offered.  The sellers came back with a counter offer that I was considering, but their covering agent sent some stupid e-mail to my agent, who forwarded it to me.  After reading it, I decided that I wasn't going to accept the counteroffer.  I didn't expect the sellers to finally accept my offer, and thought I would be renewing my lease, so I decided to get some new furniture instead.

I went and applied for one of those 24 month no interest things, but was turned down.  Thankfully.    Even before I had really considered a housing loan, I went to two car dealers looking for a new car, GM was doing 72 month no interest on a car I was interested in, and two dealers pulled my credit.

All of this pulled my credit score down, even though I didn't buy anything, and this was the reason I was denied for the furniture.  Obviously, in the end, it was a good thing, since I didn't need that extra monthly payment, but watching what you apply for, and what your credit is doing has a huge effect on getting a mortgage.

The funny thing was, I never really understood that until talking with my broker.  Your credit FICO is very easily changed, by the slightest thing, so if you are in the market for a home, take a real close look at what you are doing.

One other thing, I have a negative report on my credit history from a cellular phone company that I will not mention.  It's still there, and all the loan people wanted from me was a written explaination about what happened.  It's still on my report, probably go away next year, but I was told that unless we absolutely, positively needed to get it off my report, to leave it there.

Gary