Posted: Saturday, April 2, 2011
By ELAINE ROSE Staff Writer Press of Atlantic City
So you’ve found your dream home, or at least have an idea of what you want. Now you have to borrow the money to pay for it.
The good news is that it isn’t as hard to get a mortgage as some people believe, southern New Jersey mortgage brokers say.
“All the lenders I’ve spoken with say they have plenty of funds they want to put out there and put to work for the company,” said Janet Bossi, a senior vice president with Ocean City Home Bank.
And with interest rates at near-historic lows and home prices down, now is the ideal time to buy, brokers said.
“There may never truly be a better time to buy a home or to refinance,” said Steven Brasslett, vice president of Vision Mortgage Capital in Linwood. “Mortgage rates are so low, you can buy an entry home today and have your mortgage be cheaper than a rental.”
The lending industry calculates an “affordability index,” based on home prices and interest rates, and it’s at a 15-year low, said Steve Cors, CEO of the Superior Mortgage in Hammonton.
But the days of easy loan money are over, he said.
“We’re back to a very full verification, looking at two years of job history, tax returns,” bank statements and credit reports, Cors said. “People can certainly borrow. They just have to provide the information and be credit worthy.”
Ocean City Home Bank even rechecks borrowers’ credit reports and verifies they are still employed about 10 days before closing, Bossi said.
“There’s a lot more follow-up than there was a few years ago,” Bossi said.
If your FICO (Fair Isaac Corp.) score is lower than 620, it will be hard to get a mortgage, Cors said.
FICO scores range from a low of 350 to a perfect score of 850. People can learn theirs for about $20 at
Brasslett said he advises people to check their FICO scores before they start house hunting. A lender can go over the report and suggest ways to boost a score.
“We don’t think anything’s worse for a family or a real estate agent to spend a lot of time looking for houses and then find they can’t afford it,” Cors said.
Not all lenders are alike, and it’s best to get a recommendation from someone you trust, Brasslett said. Friends, colleagues, real estate agents and your lawyer are good people to ask.
Many real estate agents won’t show houses to someone unless they’ve pre-qualified for a loan, Cors said. His company give pre-qualifications for free.
Clients provide information about their income and assets, produce copies of their pay stubs or other supporting records and give permission to run credit reports. The company then tells them how expensive a home they can afford and what the monthly payments will be, Cors said.
“If everyone had done it this way, we wouldn’t have had a meltdown,” Cors said.
And then there’s the down payment.
In the old days, you had to pay 20 percent of the home price up front qualify for a mortgage. Some financial gurus recommend home buyers still follow that rule.
But a lower down payment can get you in the door.
The Federal Housing Administration requires a 31/2 percent down payment, and some of that can be gifts from relatives, Brasslett said.
But buyers who put down less than 20 percent of the home’s value must purchase private mortgage insurance to protect the lender in case of default, Brasslett said. That can tack $50 to $200 onto the monthly payment.
The old-fashioned way
About half his clients buy properties with FHA, USDA or other government-insured loans, Brasslett said.
But people who can pay 20 percent or more down can often get a lower interest rate, especially if they have good credit, he said.
The First National Bank of Absecon hasn’t foreclosed on a property since 1983, said executive vice president Thomas Campbell. That’s because they provide only conventional mortgages and don’t sell the loans to investors.
To qualify, a borrower has to have a 20 percent down payment, Campbell said. Borrowers must provide proof of employment and of their assets. The bank reviews the borrower’s credit report, but doesn’t rely on FICO scores.
A few late payments won’t prevent you from qualifying, but a pattern of delinquencies is a problem, Campbell said.
Ocean City Home Bank works with Fannie Mae and Freddie Mac, but not other federal agencies, Bossi said. For a loan on a primary home, the bank requires a 5 percent down payment. That goes up to 10 percent for a second home.
“We don’t do loans with poor credit,” Bossi said. “We want to know not only that are you are able to repay, but that you are willing to repay.”