My Dad mentioned to me yesterday that he read that the money for zero down mortgages is drying up. I assume since I'm already pre-approved and since the bank has already underwritten my loan (I called again on Friday and the woman I spoke to said yes it was done and I should be getting the letter either Saturday or Monday), that so long as I use that loan before whatever the term on it is expires, I'm okay. Perhaps I shouldn't make that assumption....

Because today I saw this article, Lenders Broaden Clampdown on Risky Mortgages. According to that, banks are cutting back to the older, conservative, ways of determining who gets a mortgage and what mortgages are offered. From what I understand of what I read, I don't think I have too much to worry about right now. But if this gets worse and I haven't bought yet, I could be having to worry, a lot.

Unfortunately the article also says banks are increasing mortgage rates for offered loans. I'm not sure why, it's supposedly to compensate for what's going on with the market, but it seems to me increasing mortgage rates would only deter people from trying to get loans and increase the risk of those who do get loans ending up defaulting on them. Aren't both of those things events that banks want to avoid?

Since that article said it was from Real Estate Journal.com I hopped over there to see if I could find it for proper linking. What I found was an article that made me think of another variable in my set of issues to consider that hadn't even crossed my mind. I know my mortgage is set to adjust near the end of next year. I know that if I decide to buy next year instead of this year, I should not refinance to avoid the adjustment in my mortgage rate. What I never considered is that if I decide not to buy this year or next, that I might not be able to get a refinance on my mortgage! I believe if my condo's value drops below what I owe on the mortgage for it, I will not be allowed to refinance.

Yikes.

I will definitely have to look into that if I don't find a house I want to buy or can't seem to sell my condo this year for what I need. In the meantime, Real Estate Journal.com goes on my list of links to keep up with.

Labels: Home Buying