Crumbling credit markets, falling interest rates, subprime borrowing, mortgage crisis and on and on.  With all of the financial terminology being thrown around, the whole borrowing market can be a little bit overwhelming.  Let’s cut through the junk and talk about the things that matter when you are searching for a home loan in today’s market.

It’s a buyers market right now, especially if you have good credit and cash for a down payment.  Rising numbers of homes on the market and low interest rates means there are deals to be had.  The flip side is that the credit markets have tightened up – in other words, it’s tougher to qualify for a loan.  Here’s why – those same lenders who were willing to let anyone and everyone borrow money over the last two years have painted themselves into a corner.  People who should not have been able to get a mortgage got them and then (shockingly) could not pay them back.  Today’s borrowers are paying for the sins of yesterday’s borrowers.  So what does that mean for today’s buyers?

1.      It’s tougher to get qualified so get qualified early.  It gives you peace of mind and lets sellers and their agents know that you are serious.

2.      Make sure you pay all of your bills on time.  It will come back to haunt you if you miss payments or make late payments (more than 30 days).

3.      Just because you “qualify” for a $300,000 loan does not mean you should buy a $300,000 house.

4.      Shop for the right lender.  Ask friends, family members and co-workers to recommend someone they used. 

5.      You are responsible for your finances so understand your loan terms!!!  Don’t take your lender’s word that you can afford a two-year option ARM.  Were some lenders misleading or inappropriate in the way they lent money?  Absolutely, but every borrower signs their name to the loan documents.  Know what you are signing, ask questions and don’t be afraid to tell your lender what you think.  You are the one promising to pay back a

LOT of money so don’t sign something you don’t understand.  Pay an attorney or financial planner to look over the paperwork…consider it an insurance policy.  Isn’t it worth it to pay someone $500 to make sure the paperwork is correct when we are talking about a $300,000 mortgage?  I am tired of hearing people who are being foreclosed upon who blame their lender for their current financial position.

The bottom line is that the market is ripe for qualified buyers.  Combine extremely low interest rates and a market that MAY be near the bottom in terms of home values (depending on who you believe) and you have a terrific scenario for buyers.  Follow the simple advice above and you’ll be well on the way to a positive home buying (and borrowing) experience.

Happy Buying and Selling!