A famous quote we have often heard in many venues regarding less than properly supported news reports: Don't believe everything you read or hear.
In the face of the rising sub-prime mortgage market challenge, many articles are now being seen on the Net and in print that prospective homeowners now have a tougher time getting a mortgage. Part of the news carried on one of the "Big 3" channels noted that Wells Fargo had raised mortgage rates from 6.8% to 8% on homes over $417,500.
No doubt this was a shock to any buyer purchasing a mid to upper tier home(in many markets...and average home in some markets)!!!! But that would be based on incomplete
Mortgages over $417,500 are termed Jumbo Loans and are not directly insurable by FHA or VA and beyond the standard loans sold to GNMA and FNMA to be repackaged in marketable securities. Bottom Line: Rate change was on Jumbo Loans over $417,500, not homes priced $417,500 and above.
It isn't unusual for such loans to be pricier than the standard loans!!! Perhaps this difference wasn't so evident during the period of "lax" underwriting.
Thus, if you are buying your dream home or your starter home, for example, at $550,000 and putting down $150,000, resulting in a $400,000 mortgage, you don't have any worries....you didn't just suffer a 1.2 basis point increase in interest rates.
Rates remain very good by any historical standard. Only now the buyer must truly be qualified to buy the house. A good basis for the mortgage business and for the buyer to keep the house rather than get into something he or she will be giving back to the bank in a year.
If your credit is a bit spotting, clean it up!!! If you are short on closing costs and downpayment,
save rather than spend. If you just need know where to get started for your situation, post your questions...every one learns!