Kevin McCormally: I am Kevin McCormally of Kiplinger's. I am here with Pat Esswein, the Housing Editor of Kiplinger's Personal Finance Magazine, to talk about what you need to know if you are looking for a mortgage now. Pat, the subprime mess is reverberating through the entire economy but particularly, if the people are trying to buy a home, what does somebody need to know who needs to get a mortgage today?
Pat Esswein: I think that the essential thing to know is that it is going to be harder to qualify that is to meet the lender standards for getting a mortgage now than it was a few years ago.
Kevin McCormally: What about the 100% loans, ones with no down payments? Are those still available?
Pat Esswein: To some extent, but the greater the downturn in the market where you are buying, the less likely you will find 100% financing.
Kevin McCormally: Okay, we used to hear about some lenders giving loans to people without even verifying their income. Does that still happen?
Pat Esswein: Those low-doc or no-doc loans have all disappeared now.
Kevin McCormally: Okay, what about adjust-rate mortgages? We know a lot of people, who are losing their homes now, are people who have got low teaser rates and then they have adjusted it up. Are ARM has gone?
Pat Esswein: No, Adjustable Rate Mortgages are certainly here to stay but lenders will qualify you at that fully indexed rate. No longer will they qualify you for the loan or give you the loan based on just that initial teaser rate.
Kevin McCormally: So, you are going to have to be able to afford it after it's gone up, may be $200 a month.
Pat Esswein: Exactly.
Kevin McCormally: Okay, thank you, Pat.
Transcription by:
Scribe4you Transcription Services