Confusion now hath made its masterpiece!

The above quote from Shakespeare accurately describes the current state of the lending world as the non-stop changes in this credit sensitive market continue to make qualifying for a mortgage more confusing than ever. Lenders have been steadily increasing their credit standards and now private mortgage insurance companies are tightening their qualifications. This tightening has changed loan programs across the board (across the country). Here are some of the recent changes.

– Most people know by now that 100% financing succumbed to the current state of the lending world at the end of March effectively making 97% financing the “new 100% financing.” Now, PMI companies are making it more difficult for borrowers to qualify to buy a home with only a 3% down payment.

– A+ credit isn’t what is used to be! Once upon a time, borrowers with a 680+ credit score received the same rate as a borrower with an 800 score. That is definitely not the case today. There are now a few new categories for rate adjustments: 680-699, 700-719, and some lenders even have 720-739!

– Lenders are making it increasingly difficult to qualify for investment properties. Clients looking to buy an investment property should expect at best a 10% down payment and now need to have an above average credit score. **UPDTATE as of June 2008 — minimum down payment amount for purchasing a condo as an investment property is 20%**

Don’t worry. If you are confused, you are not alone!

So what is the best way to prepare yourself if you plan to move into this mortgage madness?? Back to the basics . . .

– talk to a professional (like me) and get pre-qualified before you begin looking at homes

– make a quick phone call to double-check available rates, monthly payments and loan qualifications the day you make an offer on house.

– remember that before a bank or other lending institution will loan you hundreds of thousands of dollars, you should be prepared to invest a little in the process (a down payment of at least 3%), be able to prove you can meet your credit obligations (a good credit score), be able to prove you can afford the monthly payments (capacity and document-able income) and know that all the rules change if the collateral isn’t worth what the sales contract hopes it’s worth (meaning the appraisal does not support the purchase price).

Clay Jeffreys is a Mortgage Consultant with Hillside Lending, LLC and writer for “Blog Pertaining to the Acquisition of a Mortgage to Purchase a Domicile.” Hillside Lending seeks to provide mortgage brokerage services with the highest standards of service, care, honesty, integrity and value; concentrating on owner-occupied, residential financing. For more information about available programs and interest rates, please visit www.hillsidelending.com.