Lynn Underwood over at the the Star Tribune in Minnesota recently gave this useful overview of various mortgage programs now available:
Just six months ago, home buyers with borderline credit, questionable income and no money down could easily snag a mortgage.
Today lenders are playing it safe in response to increasing problems with subprime sweetheart loans and recent state legislation that created stricter lending guidelines.
Although the lending landscape has changed, there are still plenty of consumer-friendly loan options for a wide range of home buyers.
Ronny Loew, senior mortgage banker at First Horizon Home Loans, Edina, said the industry is responding by taking a more conservative approach. “We’re taking a big step back to the old ways,” he said.
Some of those time-tested loan programs have been around for decades. Federal Housing Administration (FHA) loans, for example, weren’t highly promoted in recent years because they offered less profitability to brokers, came with strict guidelines and could be time-consuming to process.
“Now they’re one of the only games in town,” said Kris Wilson, a senior loan officer at Fairway Independent Mortgage, Bloomington.