As extraordinary demand for homes in Austin and the rest of the country continues unabated…it made me wonder whether lenders are relaxing their requirements for loans.
I was curious what I should be advising my clients. So I called up three mortgage officers who have earned my trust through their ability to get loans for my clients while making the process as painless as possible.
I asked them whether lenders were accepting less as down payment and/or relaxing their lending standards to attract more loans.
Here is what they said about any mortgage updates:
Joe Krupp with Highlander Mortage (email@example.com):
We can go as low as 3.5% down on FHA but the MI terms [mortgage and interest] are so appalling that it is in the buyer’s best interest to swing 5% down, if they can. FHA 3.5% down payment can all be gifted, but on a conventional, the first 5% down must come from the borrower’s own funds. That is really the only major headwind for a first-time home buyer.
David Taughingbaugh with Prosperity Bank (Dave.Taughinbaugh@prosperitybankusa.com) says that lenders aren’t relaxing their standards and it still takes 5-10% down on conforming loans.
Lucinda Bachman with Ameriprofunding (firstname.lastname@example.org) echoes their views: Well…requirements aren’t really easing any, I don’t think. At least I have not seen or felt any easing! The down payment guides are still the same.
Bottom line – it’s tough to buy a home in Austin. Tough to find a good home within your budget and tough to meet loan requirements.
My advice to home buyers is to start early with a lender. Earlier than you start your actual home search.
You may need to save more for a down payment, you may need to repair your credit, you may need to pay down student debt.
With a pre-approval letter and a short period for loan approval you stand a much better chance of getting your offer accepted in Austin.
Summer is usually the peak of the Austin real-estate buying season. Whether that holds true this year remains to be seen…because there just isn’t any inventory.
In any case, getting your finances in order is always a worthwhile summer activity.