What’s Hot?

FHA Loans –  Yup, the time tested FHA loan insurance program is skyrocketing once again in popularity now that its mortgage limits are in line with desirable home prices and as subprime loans are not being tendered to on the fringe buyers anymore.  The FHA terms are fairly forgiving to the borrower and generally work well for those who’ve had some financial issues.  Extra Bonus:  Interest rates are very competitive with conventional loans.

Manual Underwriting –  A common sense approach to mortgage lending makes more and more sense as we step away from the period of wholly irresponsible and impersonal lending that in part gave us the subprime crisis.  Your personal situation is more than a credit score number and many mortgage bankers understand this.  This traditional underwriting process might place the buyer under a bit more scrutiny, but the results will usually pay off for all involved.  Expect manual underwriting to increase in popularity again.

Old Fashioned 30 Year Fixed Mortgages –  For people that can afford them anyway.  Those that are watching ARM rates increase and those that are watching record loan defaults and foreclosures take place due to irresponsible borrowing are taking some peace in the security and regularity of knowing exactly what the payment will be for time to come.  Those in the know just aren’t wanting to take on any extra risk no matter if the introductory terms are more favorable or not.

What’s Not Hot?

Piggyback Combo Loans –  Mortgages following the practice of borrowing 80% on a first and 20% on a second to finance 100% of a home purchase without mortgage insurance often aren’t as competitive rate-wise as even FHA’s are.  100% mortgage financing is becoming riskier than ever.
 
FICO Score Lending –  The automatic process of home loan lending based on a buyer’s FICO score is as rampantly commonplace as ever, but it just doesn’t factor in common sense or real life factors.  As people demand to be treated as people rather than numbers, traditional manual underwriting will regain its popularity.

Stated Income Loans –  These type of no or low doc mortgage loans are disappearing in availability faster than you can imagine.  In fact, the State of Nevada is even considering banning them under most cases.  Really, this makes sense.  After all, if someone is insistent on not proving their financial state, then chances are they have something to hide anyway.