Finding a Mortgage Today Is Harder, but Doable

Pava J. Leyrer, president of the Michigan Mortgage Brokers Association, has been working with the Bennetts. She said buyers today are not looking at the price of a home but at what their monthly mortgage payments will be. She said people are factoring in local taxes, personal mortgage insurance and other monthly expenses that were once ignored.

"I think they're really starting to look at their overall budgets," she said.

Across the country, Frank Bowersox, president of the Pennsylvania Association of Mortgage Brokers, sums up the market today this way: "We have returned to doing business the way we did 10 years ago."

Today's buyer will need to make a larger down payment than before, Bowersox said, but there are still plenty of loans out there.

"The industry is sound and will take its lumps as it has before, but we'll bounce back and still help the consumer who wants the joys of homeownership," he said. "We'd be putting our heads in the sand if we didn't identify the fact that there are some problems, but at the same there are loans being closed each and every day of the week."

Olga Kucerak, president of the Texas Association of Mortgage Brokers, said the market has obviously tightened.

"Monies that are available have been restricted," she said. "But there is still money out there for your borrowers with good credit, good documentation of income. We're still making loans."

Kucerak said most borrowers are staying away from adjustable-rate mortgage and sticking with traditional 30-year-fixed-rate mortgages.

There are many factors going into whether or not somebody gets a mortgage.

Lenders consider how much money somebody is trying to borrow compared to their income. Generally, the mortgage payments — including taxes and insurance — shouldn't be more than 28 percent of pretax income, according to the Mortgage Bankers Association's Brinkmann. When credit card and other outstanding debt is added in, the debt figure should not be more than 32 percent to 34 percent.

Finally, in some higher-priced markets there is another complication: the market for so-called jumbo loans has almost completely dried up.

Any mortgage for $417,000 or more is considered a jumbo loan, regardless of the sale price of the home. This distinction stems from guidelines established by Fannie Mae and Freddie Mac, quasi-governmental lenders who buy up the bulk of mortgages made for first-time home buyers or those done for affordable housing.

There are very few people willing to buy jumbo loans on the secondary market and those few buyers who once existed are now reluctant to take on such mortgages.

Jumbo loans are a small part of the mortgage industry and are only found in high-priced real estate markets such as California, New York, Chicago, Seattle and Boston.

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