Buying a Home is Wisconsin: prices good, lending tougher

Prices are right for first time home buyers or move up buyers, but financing, which in recent years was quite easy to get, is getting tougher.  Save your pennies for that downpayment because you are going to need it. While maybe harder for buyers to enter into homeownership, the article below points out some changes that just seem to make good sense. If you are going to borrow, have a down payment, have good credit. Borrow smart, lend smart. Home ownership is a responsibility and one well worth it.

From Real Trends email update #987:

Falling prices in many parts of the country have improved affordability for those interested in becoming homeowners for the first time, but financing the purchase has become a bigger challenge. Lenders, in general, are requiring larger downpayments and higher credit scores, criteria that can trip up first-time buyers. It’s typically first-time buyers who have the toughest time scraping together a downpayment.


According to the National Association of REALTORS, 45 percent of first-time homebuyers opted for 100 percent financing between July 2006 and June 2007. The median percentage that first-time buyers financed was 98 percent.



No-downpayment loans “are still happening, but with a lot more restrictions than before,” says Barton Pitts, president of Downers Grove (IL).-based Professional Mortgage Partners.



Borrowers today are going to have to verify their income and verify their financial assets to lenders, says Frank Nothaft, chief economist for Freddie Mac, the government-sponsored mortgage agency. A FICO credit score of 660 to 680 is now the minimum most lenders will consider to prove your creditworthiness, he says.



Some in the industry figure that many borrowers will need about a five percent downpayment on a typical loan these days. Others are predicting heftier restrictions to entry. According to Guy Cecala, publisher of the industry newsletter Inside Mortgage Finance, a first-time buyer in many markets will soon need even more money down – perhaps 10 percent. “And I think before too long we’re going to see it up to 15 percent to 20 percent,” he adds.

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