Could gloomy popular assumptions about how tough it is to get approved for a mortgage be scaring away large numbers of people who are qualified from even applying?

Could the same worries – I can’t come up with the big down payment I need, my credit scores are too low, my bank account has almost none of the “reserves” lenders want to see – put a needless damper on a housing recovery in the new year?

You bet. Lenders and economists will tell you flat out: The lack of accurate information about the availability of loan programs that are designed to address special needs is discouraging far too many consumers from even considering an application, much less shopping around.

Mortgage banker Alex Stenback of the Residential Mortgage Group in Minnetonka, Minn., says he sees it every day: “People just aren’t aware of what’s possible right now” and as a result, they are missing real estate prices and long-term interest rate opportunities they shouldn’t. Doug Lebda, founder and CEO of LendingTree, the online site that allows banks to make competing offers to applicants, believes that “the fear of being rejected” because they don’t conform to standards that may not even exist, is keeping qualified applicants on the sidelines for no reason.

For example, what’s needed for an acceptable down payment? Is it 20 percent? 10 percent? Less? Yes, it’s less – and potentially a lot less if you qualify for the right program. The widespread erroneous assumption that banks require a minimum 20 percent for conventional loans may have arisen from heavy media coverage this spring and summer of a controversial proposal by federal agencies calling for borrowers to put down that much if they want to get the best interest rates and lowest fees.

Also contributing to incorrect beliefs about down payments: The Obama administration floated the idea of a phased-in move to 10 percent upfront cash for all loans eligible for purchase by mortgage giants Fannie Mae and Freddie Mac, who together dominate the conventional home-loan sector. But neither the 20 percent nor the 10 percent plan has been adopted and the odds of either moving forward in 2012 are remote. Fannie Mae’s and Freddie Mac’s standard minimums are still 5 percent with mandatory mortgage insurance coverage.

If you have little or no cash to put down, there are multiple options for you: FHA requires just 3.5 percent down on its insured mortgages. Other programs let you go to zero – even finance more than the price on the house when fees are rolled into the mortgage – provided you fit into an eligibility niche. If you qualify as a veteran or active member of the military, you can get a zero-down VA-guaranteed mortgage. Plus the VA allows your seller to pay your loan fees and closing costs provided they don’t exceed 6 percent of the house price.

You can also buy with nothing down if you are purchasing a home in any of the many communities around the country that are eligible for rural (USDA) guaranteed mortgages. Though the property may be located on the outskirts of a large metropolitan area (some are available in the greater Tucson area) – land that might not strike you as particularly “rural” – if the local population is below roughly 20,000, there’s a decent chance you’re eligible. The little-publicized USDA guaranteed home loan program, by the way, is booming. In the last fiscal year alone, according to housing administrator Tammye Trevino, more than 130,000 borrowers received low or no down payment guaranteed mortgages – quadruple the number of loans extended as recently as 2006.

What about credit? Haven’t lenders been pushing up minimum FICO scores into the mid-700s and rejecting applications with lower scores outright? Not everywhere. Though most lenders doing FHA loans require 620 to 640 scores to get you in the door, a few of the biggest FHA originators, such as Quicken Loans, will accept scores down to 580. Bob Walters, Quicken’s chief economist, says underwriters scrutinize low FICO applications extra carefully but are seeing good to excellent performance from them: Not one has gone seriously delinquent this year.

And how about debt-to-income ratios? Aren’t they tighter than ever? Not really. Lenders say that when loan applications go through the “automated underwriting” systems used by Fannie, Freddie and FHA, borrowers with high total monthly debt levels of 45 percent to 55 percent of household income – well beyond the posted limits – frequently get approved if they have positive compensating information elsewhere in the application.

Bottom line: Don’t assume you can’t qualify for a mortgage in 2012. Talk to lenders and seek out loan products that offer flexibility where you need it. You just might be surprised.

http://azstarnet.com/search/?l=50&sd=desc&s=start_time&f=html&byline=Kenneth Harney Washington Post Writers Group

Happy holidays, homebuyers! You just got a very nice present.

Mortgage rates have hit record lows, with the interest rate on a 30-year, fixed-rate loan, the most popular choice of homebuyers, averaging 3.91% this week, according to Freddie Mac’s Primary Mortgage Market Survey.

That’s down from 3.94% last week, and is the lowest in the 40-year history of the survey.

Rates have fallen 0.9% since the beginning of the year. For a homeowner with a $200,000 mortgage, that means a savings of $1,200 a year, said Frank Nothaft, Freddie’s chief economist.

With rates at or below 4% for the last eight weeks, home sales are getting a boost, Nothaft added. Existing homes sold at their fastest pace since January last month, according to the National Association of Realtors, and new home sales edged higher in November as well.

Where homes are affordable

Meanwhile, rates for 15-year mortgages remained unchanged, matching last week’s record low of 3.21%.

“We’ve entered the holiday lull with nothing much happening to change rates one way or the other,” said Greg McBride, senior financial analyst for Bankrate.com.

Mortgages should remain affordable deep into 2012, he added. As the European debt crisis and sluggish U.S. economy keep investors focused on finding safe havens for their cash, demand for U.S. Treasury notes should remain high. That drives down their yields, which mortgage rates closely track.

“For well-qualified buyers, interest rates should be no impediment to home buying in 2012,” said McBride.

Refinancers also are pouncing on the bargain rates.

According to the Mortgage Bankers Association, about 80% of all mortgage applications last week came from existing homeowners looking to refinance their old loans into more affordable ones.

0:00 / 3:35 Zillow CEO: Why we partnered with Yahoo

McBride even expects that lenders will ease up on borrowing requirements — marginally — in 2012.

“Instead of requiring a 740 credit score for the best rates, lenders will dip their toes into 720 waters,” he said.

That is, however, just a baby step towards making mortgages much easier for borrowers with less-than-perfect credit histories to obtain.

“We’re not going back to the Wild West days of the boom,” said McBride.

By Les Christie@CNNMoney

Bank of America is trying a new approach with underwater homeowners in Florida: It is offering them money to dispose of their homes in a short sale.

It offered payments ranging from $5,000 to $20,000 to homeowners who agreed to sell, and got positive responses from about 15% of the 20,000 customers to whom it offered the deal.

The program was aimed at homeowners who cannot afford their mortgages, so not all qualified. The amount of the incentive program was based on the size of the mortgage, as well as other factors, according to an article in The Tampa (Fla.) Bay Times.

Apparently, the homeowner doesn’t find out how much the incentive payment will be until after the sale contract has been signed. The payment is made when the sale is closed.

“The bank is not putting in writing how much homeowners will get until the end,” Steve Capen, a short-sale specialist with Keller Williams Realty, told the newspaper. “By that time, homeowners have entered into a contract to sell. We’re going to have issues. Customers are going to be upset.”

About 3,000 BofA customers agreed to participate in the program before the deadline passed last month. The bank has said it would consider offering the program in other states.

Bank of America is not the only lender to offer homeowners financial incentives to sell homes the lenders think are headed for foreclosure. Florida was a logical place to launch a pilot program. Not only are a high percentage of homeowners underwater, but foreclosures take almost two years to complete.

Wells Fargo offers payments of $10,000 to $20,000 to certain homeowners who agree to a short sale or a deed in lieu of foreclosure. JPMorgan Chase also has offered some short-sale incentives of up to $20,000, and Citibank says it offers payments averaging $12,000 on mortgages it owns. (The Orlando Sentinel has more details.)

The federal government’s Home Affordable Foreclosure Alternatives program offers homeowners up to $3,000 in relocation assistance.

The lenders are calculating that the incentive payments are less than they would spend on foreclosure, especially in states such as Florida where foreclosure is a judicial process that has been slowed even more by the repercussions of the robo-signing scandal and problems with law firms hired by the lenders to bring foreclosures.

“The banks have realized, ‘We are losing more on the foreclosures than the shorts,’” Matt Augustyniak, president of Horizon Realty in Bradenton, Fla., told The Herald-Tribune of Sarasota. “And they are even willing to compensate the sellers, to give the sellers money to vacate the property.”

By Teresa at MSN Real Estate

Foreclosure filings and repossessions fell to their lowest level since 2007 last year.

Total filings, including default notices and bank repossessions were down 33% for the year to 2.7 million, according to RealtyTrac, the online marketer of foreclosed properties.

One in every 69 homes had at least one foreclosure filing during the year, while 804,000 homes were repossessed. That’s a significant improvement from the peaks reached in 2010 — when 1.05 million homes were repossessed — and the lowest levels seen since 2007.

More than 4 million homes have been lost to foreclosure over the past five years.

While the declines seem like good news for the housing market, where a flood of foreclosed homes has depressed home prices, much of it is due to processing delays caused by fall-out from the “robo-signing” scandal that broke in late 2010.

During the year, banks spent more time making sure paperwork was legal and proper, creating a backlog in the foreclosure pipeline. As a result, the average time it took to process a foreclosure climbed to 348 days during the fourth quarter, up from 305 days a year earlier.

“Foreclosures were in full delay mode in 2011, resulting in a dramatic drop in foreclosure activity for the year,” said Brandon Moore, chief executive officer of RealtyTrac.

However, Moore said there were “strong signs” during the second half of the year that lenders are working through foreclosure backlogs in certain markets. He expects foreclosure activity to rise above 2011′s level but remain below the peak hit in 2010.

By Les Christie@CNNMoney

As many of you may have heard, the President signed a bill in November reinstating the higher FHA loan limits
that expired at the end of September.

 At this point we are waiting on the following:

 1. Mortgagee Letter detailing the new loan limits

2. Guidance from our Correspondent partners stating when we will be able to begin originating
    and locking loans at the higher limits.

 As soon as we have more information it will be distributed.

Have you heard of a FHA 203K, a rehabilitation loan that will bring the property up to FHA Standards while minimizing your down payment and your cash out of pocket for repairs???

If you haven’t heard of the FHA 203(k), you may be missing out on a real estate opportunity.

Many people avoid FHA loans because of the requirements on property conditions, also, they find it difficult to negotiate on REO’s for repairs. Therefore, many home buyers are missing out on the opportunities that bank owned properties present. Please contact me today to learn more!