After the subprime mortgage market took the dip last week, is it even possible to get an 80/20 loan now?

And is it better to obtain the loan, through an online site or through a mortgage consultant?

Firstly, the subprime market is not affecting the prime market. The 80/20 is still alive, and if you have good scores you can get the better deal with any lenders. You may not want to go for an online lender for your first purchase transaction.

You will be dealing with someone with marginal experience at best. It is always good to be able to sit down face to face with someone the first time you borrow a couple hundred grand. Plus, almost all loan officers/mortgage brokers work on commission.

This means you have someone working for you that will not receive a penny unless they close your loan. Which should mean they work extra hard to make it happen, compared to some salaried processor at a call center for some random online lender, where they get paid regardless of whether your specific loan actually closes.

The current market allows you to get rates on 80/20 anywhere between 6.125% to 7.375% 80/20. Moreover, it is better to get a couple referrals to loan officers from friends, family, coworkers, etc.

Talk to at least a couple different brokers or bankers. Everyone does things a bit differently, and some have investors and products that others won’t, so the offers could vary quite a bit.

But if you have a good credit score and you have maintained it since a few years now, you should very easily qualify for 100% financing. Further, you can always ask if a 75/25 would save money you more cash over an 80/20.

It’s getting more difficult to get 100% financing with scores under 620. That’s where the tightening is taking place, along with the reduced documentation (no income verification/stated income loans).

Anyone pitching you a short-term ARM, you should probably avoid. Fixed rates are right about equal with a 5 year fixed ARM right now, so why bother?
 


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