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Tuesday, Apr 23 2013 12:00 AM

The State of Real Estate: Navigating the new mortgage landscape

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Mortgage rates are at all all-time low, but homebuyers must be prepared before jumping in to the real estate market, local financing specialists say. Photo SOURCE: Metro

Homebuyers lucky enough to snag a good deal in Tehachapi's competitive real estate market, are eventually going need to get approved for a home loan -- a process that at best can be stressful and confusing.

And with all the talk of how tough it is to get "mortgage approved" in today's post-real estate crash climate, it's no surprise that fewer Americans feel they are qualified to buy a home.

However, navigating the mortgage landscape can be made easier if borrowers are better prepared, taking steps to study their options and learn what to expect from a lender.

According to Tammy Engel, Mortgage Advisor, the basics of mortgages haven't changed much, but the level of quality control has definitely been beefed up, making things a bit tougher for borrowers who have made mistakes in the past.

Those that have had bankruptcies, foreclosures and short sales, coupled with bad credit events after, or have not reestablished credit, may find getting the money for their dream home tough -- and in some cases impossible.

"The biggest change is every piece of the loan file is under intense scrutiny," Engel said. "Unexplained cash coming into a bank account, bankruptcies and foreclosures within the last two years, and not having a job are all deal breakers."

But for those who can prove they can pay back the money they are borrowing, there is a good chance they can take advantage of one of the best times in history to buy more home for their money.

"The values of homes are still down, but the good news for buyers is that rates are down, too," said iMortgage Loan Consultant Tracy Price. "You can't get any better than it is right now."

In fact, mortgage interest rates across the country slipped to near-record lows last week and combined with the spike in recent mortgage competition -- partly due to an imbalance between the number of lenders and loans -- some mortgage companies have lowered their credit standards to qualified buyers to win their business. Loosening up down payments of conventional loans, which soared to 10 percent after the crash of 2007, but have since relaxed back to five.

Those acquiring an FHA loan, however, will still be required to put 3-1/2 percent down.

But what about buyers who want to get into a home and can't come up with the necessary funds for a down payment?

Price said there are a couple of government programs that can help. Veterans Administration loans and the Rural Housing Loan both allow zero percent down.

Generally set at a population of 20,000 -- Tehachapi was able to keep its "rural" label until at least October 2013, when the program will likely adopt new boundaries based on the 2010 Census, and it will be eliminated like many other areas that have experienced a housing boom since 1991.

Being prepared

It wasn't long ago that most real estate agents would be happy to spend days or even weeks with potential buyers, hunting for that perfect home. But in today's market, you need to be prepared, especially up front.

"Don't call an agent until you're pre-qualified," said Linda Clough, President-Elect of the Tehachapi Area Association of Realtors. "Get your stuff in order."

Engel agreed.

"It's extremely important to be pre-qualified, because whatever you thought about lending before, no longer applies," she said. "So it's important to sit down with someone who is seasoned and experienced to go through your information and structure the loan with you."

In fact, many real estate agents require a pre-approval letter, showing that a lender has already checked the buyer's credit, has ironed out any issues and is ready to literally write a check when the time comes.

Clough also brought up that buyers should also be prepared to shell out more out-of-pocket money, as sellers are often times not willing to pay closing costs, as they recently had in a down market.

"Don't be afraid to ask (for closing costs to be paid by the seller)," she said. "But save a little more money and be prepared to pay your own."

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