One of the last resorts to fund your real estate deals should be a hard money loan because you are dealing with experienced investors who are on the lookout for good returns on their money which makes it amongst the most expensive money for you to borrow.

Hard money lenders are third party lenders and unlike the big institutional lenders charge interest rates above market rates. hard money lenders typically require 5-10 percentage points higher interest rates than private money or conventional lenders. Plus, hard money lenders will typically charge you “points” on a loan which is pre-paid interest thereby making this a rather expensive funding alternative.

So, on the plus side, hard money loans are generally worth approximately 65-70% of the after repair value (ARV) of the property in question. This is beneficial because it allows you to obtain the necessary cash to finance renovation costs as well as the purchase price. This means you can potentially get into a deal with little to no money down if the after repair value to cost ratio is high enough.

If you are trying to fund real estate investments and have poor credit, hard money loans are a viable option. Hard money lenders take the security of the loan into consideration and do not consider character or loan serviceability. For those who are on a strict time limit, hard money loans are also attractive since there is little to no wait time for approval.

Hard money lenders could be found in the “money to lend” section of your local newspaper most often. Next would be at a gathering of your local housing investing association. Local hard money lenders will attend every now and then to solicit new business. Also, you can find them on the net by searching for keywords like “hard money lender” or “hard money loans”.

Have you ever pondered when you should choose to borrow from hard money lenders for investing in real estate. Hard money loans will often be one of the last resorts for funding your real estate deals because you are dealing with experienced investors who are looking for good returns on their money. Third-party lender who charge interest rates higher than the prevalent market rates for lending is called an hard money lender. Another benefit of hard money lending is that instead of lending based on your creditworthiness or character, money lenders will lend based on the security of the loan.

The problem is that you really need unbiased refinancing tips to help you make your decision. You need to understand the dangers, as well as the pluses of refinancing a house.

The current subprime mortgage crisis had brought to light some of the more dreadful practices of the mortgage industry, with innocent home-owners convinced to take out mortgages they couldn’t really afford.

We have a long way to go with the sorting-out after the long boom – unsafe lending practices were invisible while property prices continued to rise.

Now the chickens are coming home to roost, with the cutely-named “Mortgage Lenders Implode” site (ml-implode.com) listing over 250 lenders who have “imploded” already. The site defines “imploded” thusly: The “imploded” status is somewhat subjective and does not necessarily mean operations are ceased permanently: it can mean bankruptcy filing, temporary but open-ended halting of major operations, or a “firesale” acquisition. The Companies include all types (prime, subprime, or a mix of both; retail or wholesale; subsidiaries and entire companies).

if you don’t want to be caught up in the drama, or if you are caught up and you just want to get out of trouble by home refinancing, then you need to make sure you get the right refinancing tips. Find independent sites which can offer you unbiased home refinancing information, rather than relying on refinancing tips provided by someone with a vested interest in selling you a home loan.

There are definitely pluses of refinancing a house, if you do it the right way. You just need to make sure that home refinancing is in your best interests, and that you are getting the best available deal on home refinancing.

Ask lots of questions, don’t be rushed into signing anything, and be sure you understand what your new mortgage will cost you, not just immediately, but also if the payments are going to change at some time in the future, or if there will be a balloon payment due.

The most important thing in home refinancing is your mental and financial well-being. There are many pluses of refinancing a house, when it is done the right way, and it can certainly improve your financial situation in some cases. However, you need to be sure that you get good, detailed, reliable and unbiased refinancing tips before you choose a lender for home refinancing.

Mortgage Bankers and Brokers — which should you choose?

There are two main categories of mortgage lenders — bankers and brokers. A mortgage banker is a direct lender, and the lender you work with represents the bank who lends you money. If you decide to work with a direct lender, it is your responsibility to shop around and find the best mortgage rates and terms.

The broker is a middleperson who is not tied to any particular mortgage institution—instead, they have access to mortgages from a range of different institutions, and they will usually do the legwork for you in shopping around for the mortgage that best meets your needs.

The main advantage of choosing a mortgage banker is that you know what you are getting—a reliable service, with little chance of coming into contact with a predatory lender. In addition, if you choose to get a mortgage from the bank you already do business with you may be entitled to a more favorable interest rate. The disadvantage is that you get very little choice, as most mortgage bankers offer very similar rates, terms and conditions.

A mortgage broker, on the other hand, provides you with plenty of choices. As the middleperson, a broker has access to wholesale lenders that offer a wide variety of mortgages of different types. If you need a sub-prime mortgage or another non-conventional type of mortgage, a broker is your best bet for obtaining one. For first-time buyers, a broker can also help make the process of getting a mortgage much easier, as they are able to offer advice on mortgage analysis, and the best ways of presenting loan applications.

Mortgage brokers do charge fees, of course. However, that is not always a significant problem. Brokers usually offer loans from wholesale mortgage lenders, and these loans have reduced rates in comparison to those offered by mortgage bankers. Once the broker has added their fee, the total cost of the mortgage is usually not much more than the cost of going to a mortgage banker.
The biggest potential problem in working with a broker is that this is not a licensed profession in many states, meaning that it can be difficult to be sure the broker you are dealing with is reputable.

Choose a Lender who will Work for You

Finding a good mortgage lender does not have to be difficult, even if you choose to go with a broker and must separate the good lenders from the bad before making your final choice. Often, it is not so much a case of finding a good lender as it is learning how to spot a bad one. Avoid mortgage lenders who say or do the following:

• Tries to convince you to borrow more than you want to or can afford by suggesting you opt for a higher risk loan.
• Asks you to sign blank documents.
• Encourages you to do anything dishonest, such as lie on your application.
• Does not give you a Good Faith Estimate within three days of your application.
• Promises you a mortgage that seems too good to be true—no closing costs and no points sounds great, but you should read the small print on the contract for penalties and hidden costs.

Any of the above can be good indications that your lender is more concerned with the commission they will make from your mortgage than in trying to help you find the best one for you. A good lender should provide you with several options without trying to steer you in any particular direction. They will offer you advice in helping you compare different mortgages, but should allow you to make the final decision.

Comparing Mortgages from Different Lenders

Picking out and comparing the most important points of each mortgage can be one of the most difficult aspects of getting a home loan. A mortgage is more than just an interest rate—there are also points, fees, and closing costs to consider.

Points are used to “buy down” your interest rate, with each point you buy representing one percent of the total loan amount. If you choose to buy points, the money is payable in cash at closing time. Lenders will usually give you several different rate and point options for the same loan.

The lock-in period for each mortgage should also be considered. The lock-in period is the amount of time for which the rate and points quoted are guaranteed. This is usually 30, 45, or 60 days, with higher loan fees applicable for longer lock-in periods.

Other features to compare include the maximum loan to value ratio each lender offers, whether or not you must pay mortgage insurance, the qualifying income to debt ratio of each lender, and whether any prepayment penalties exist for each Home Mortgage Company.

Mortgage Refinance

If you think it would be a good idea to replace your present home mortgage with another financial product, or you are seeking to reduce the interest rate, this may be tied up in a mortgage refinancing product – bad credit loan. These might flexible, although in the 2008 market conditions, money is not so readily available. The mechanics are similar wherever you are, so whether you are seeking to refinance a home mortgage in buck county, or want to implement a new loan from a mortgage refinance quote, it is easy for a broker to take it to the next stage. You might even consider a refinance loan for debt consolidation.

Home Mortgage Refinance

It is home mortgages that are subject to refinancing more than any other class of securitised loan. But all refinancing decisions must be preceded by a thorough understanding of what is required, and to this end there are things to be thought through before any refinance decisions are finalized.

1. Is home mortgage refinancing really the solution to my financial imbalance ?
2. What are the advantages and disadvantages of the refinancing packages available ?
3. Can I afford the repayments over the next ten years?
4. What are the hidden clauses to cause grief if my circumstances change ?

Are You Considering Auto Refinance

Are you looking for auto refinance? A lot of borrowers roll up the finance outstanding on their automobiles when considering re-mortgaging their house. This makes complete sense as the mortgage refinance interest rate which can usually be checked online, will generally be more favorable than other forms of debt. The reason is that the security is better, but you should understand that the security which the lender is happy with is the roof over your head. Whatever the outcome it is imperative you compare refinance rate promises – one with another – to be convinced you are receiving what you want.

Bad Credit Record ?

Are you in need of a bad consolidation credit debt mortgage? There are a number of blogspot.com sites where numerous blogs have been published by those wishing to sell aid for those with a bad credit history who are needing a mortgage refinance offer. Not all sites are honest, but there is a reasonable listing of people and agents who are able to help those with a poor credit rating. If you want to refinance using a mortgage company in Michigan, or you live in PA and want to refinance your home loan there, or indeed wherever your home is, there will always be a route through to meet your problem, whether it be bad credit loan or auto refinance. The unfortunate bit for those with bad credit history is that all debt structures can be more expensive, so it is very important to count the cost. You might think it a good idea repairing your credit record first by using one of the online services that specialize in this type of work.

Second Homes

The refinance rate for second mortgage loans is something to be considered. Sometimes it is even possible to find no cost home loan refinance.. Anyway, little in this world comes for nothing Look about from Coop Manhattan mortgage rate refinance to whatever else you can find in New York. Get quotations from far and wide, and get quotes online and telephone brokers to see what they are offering. Read the newspapers, scour the news for rate changes, dig for special offers.

Loan Refinance – In Summary

Refinancing your home lumping together all your outstanding loans makes a lot of sense. But you can equally refinance any loan, whether it be for a car, or a horse, or a commercial business. Try placing refinance in a search engine and see what happens. Because Google sends you responses based on where you are, you might be amazed to see what refinance is available for you span]where you are|on your doorstep|just around the corner[/spin]. If you have a genuine problem with bad credit loan, there is always a solution somewhere online.

How did HUD miss the housing crisis?

Was it inept? Too free market?

Consolidation Loans

Why did it miss the obvious signals?

Is this an issue of competence?

The Department of Housing and Urban Development ignored the signs of a looming mess.

Bush’s department loosened regulations allowing for this kind of meltdown.

Steve Benen writes:

I’ve marveled for years at the apparent corruption and incompetence in Bush’s Department of Housing and Urban Development, but the Washington Post ran a disconcerting front-page item yesterday explaining that mismanagement and criminal investigations arguably weren’t the most offensive part of Bush’s HUD.

Mortgage Refinance

In late 2006, as economists warned of an imminent housing market collapse, housing Secretary Alphonso Jackson repeatedly insisted that the mounting wave of mortgage failures was a short-term “correction.”

He pushed for legislation that would make it easier for federally backed lenders to make mortgage loans to risky borrowers who put less money down. He issued a rule that was criticized by law enforcement authorities because it could increase the difficulty of detecting and proving mortgage fraud.

As Jackson leaves office this week, much of the attention on his tenure has been focused on investigations into whether his agency directed housing contracts to his friends and political allies. But critics say an equally significant legacy of his four years as the nation’s top housing officer was gross inattention to the looming housing crisis.

They contend that Jackson ignored warnings from within his agency, the Department of Housing and Urban Development, whose inspector general told Congress that some of the secretary’s efforts were “ill-advised policy” and likely to put more families at risk of losing their homes.

Hmm, why does this sound so familiar? Bush puts an unqualified buddy in charge of a major federal agency, the Bush buddy ignores the concerns of qualified aides and experts, the buddy then sees a crisis emerge and chooses to intentionally not act, and when pressed for an explanation, the White House says Bush’s buddy is doing a heckuva job.

It seems to be a running theme with these guys.

And here’s the kicker:

During Jackson’s years on the job, foreclosures for loans insured by HUD’s Federal Housing Administration (FHA) have risen and default rates have hit a record high.

All the while, Jackson enjoyed a chef and a full-time security detail that trailed him to Washington social events. His office launched a new $7 million auditorium and cafeteria at HUD’s headquarters, money that some within the agency believed should have been directed toward housing for the poor. His office solicited an emergency bid to obtain oil portraits of Jackson and four other HUD secretaries at a cost to taxpayers of $100,000. (emphasis added)

But it was Jackson’s decision to honor himself that seals the deal. His portrait was considered an “emergency,” he hired himself a cook at public expense, and was one of the few cabinet secretaries to demand a full-time security detail, despite a low public profile.

And all of this comes on top of the fact that Bush’s HUD secretary has faced investigations from the Justice Department, his own agency’s inspector general, the FBI, and a federal grand jury.

Auto Refinance Companies

The Times of London reports on Alistair Darling’s attempts to halt the credit crisis.

Lenders and the Labor government have become increasingly hostile over the past few weeks.

The prime minister has criticized lenders for not passing on interest rate cuts to homeowners.

The Bank of England will shoot 15 billion pounds into the money market today.

It’s not enough say critics.

Auto Refinance

The main problem is that nobody wants to own mortgage-backed securities.

Chancellor Alistair Darling has called an emergency meeting with mortgage lenders to discuss ways of bringing a halt to the deepening crisis in the homeloan market.

The meeting, which will take place next week, will try to find common ground between the government and the mortgage industry, which have become increasingly critical of each other as the crisis in the mortgage market has intensified.

At the weekend Prime Minister Gordon Brown accused mortgage lenders of not passing on reductions in the Bank of England base rate to homeowners. The base rate is currently at 5 per cent – yet the average fixed rate mortgage is 6.29 per cent and the average standard variable rate, which borrowers usually revert to when their fixed deal expires, is at 7.18 per cent.

Mr.Brown said: “To create the conditions where banks feed through their interest rate cuts to homeowners and new buyers, we must first rebuild confidence in the banking system and reduce the uncertainty that is currently holding the banks back from lending to each other.”

Refinancing A Mortgage

And Mr. Darling told lenders: “What we are saying to banks is you have got to help people as well. If you can pass on those interest rate reductions, if you can help homeowners, help businesses, that will help all of us get through a very difficult time.”

The Council of Mortgage Lenders (CML), which represents banks and building societies, says the onus is not just on lenders to help mortgage borrowers. CML Chairman Steven Crawshaw said: “There is a real and immediate need for broader based action than we have seen to date.”

Tomorrow the Bank of England will inject an additional £15 billion of cash into the money markets – but lenders say this will not be enough to stave off the mortgage funding crisis. Mr.Crawshaw warned that unless additional funds become available, net lending in 2008 could reach only half of last year’s level.

At next week’s meeting, it is expected the Chancellor and the CML will discuss measures aimed at broadening the investor base for mortgage-backed securities and improving the robustness of the market.

The CML wants the Government to kick-start the mortgage-backed securities markets, where lenders bundle up their mortgage deals and sell them on to other banks and building societies. Since the credit crunch hit home last summer, these markets have effectively collapsed, as lenders hoard cash because they are concerned about access to future funding.

The CML will also urge the Government to address the “inadequate state support scheme for mortgage borrowers”. It says the Government should do more to help borrowers in serious and short term financial difficulty, in order to help minimise the level of repossessions.

Katie Tucker at broker John Charcol says: “At next week’s meeting, the crucial aim must be to restore confidence between lenders again, so that they can return to the business of lending money to each other at an affordable rate.

“A scheme to help risk-rate the securities lenders can sell on to each other, and third parties, would be a valuable move to stimulate those markets again – but only if the risk rating standards have accountable substance, like a Government-backed guarantee.”

The meeting comes after the Government set up a working party of experts to discuss how to “support borrowers in difficulty”, as mortgage lenders continue to withdraw deals and tighten lending criteria amid the continuing credit crisis.

The working party, which is not due to produce its final report until around November time, has been criticised by the CML for not “addressing the urgency of market difficulties now.”

Consolidation Loans

America has the most open credit market in the world (followed by Great Britain) because of innovations such as junk bonds and subprime mortgages.

With the easing of usury laws, there evolved a big market for lending to risky types.

In the third quarter of 2007, subprime ARMs only represented 6.8% of the mortgages outstanding in the US, yet they represented 43.0% of the foreclosures started. Subprime fixed mortgages represented 6.3% of outstanding loans and 12.0% of the foreclosures started in the same period.[4]

The American Dialect Society designated the word “subprime” as the 2007 Word of the year on January 04, 2008. [5]

Roland Arnall was often called the godfather of subprime.

A billionaire, he owned ACC Capital Holdings, which is the parent company of Ameriquest.

Ameriquest was one of America’s most aggressive subprime lenders. In early 2006, the company went public with a $325 million settlement with state attorneys general and law enforcement agencies and financial regulators in 49 states and the District of Columbia. What was up? Allegations of predatory lending practices. Ameriquest was charged with misleading and overcharging borrowers. Another charge was falsified loan applications.

Refinancing

Fannie Mae has lending guidelines for what it considers to be “prime” borrowers on conforming mortgage loans – those loans they will buy or securitize into the credit market. Their standard provides a good comparison between those who are eligible for prime vs. subprime loans. Eligible borrowers for prime loans have a credit score above 620 (credit scores are between 350 and 850 with a median in the U.S. of 678 and a mean of 723), a debt-to-income ratio (DTI) no greater than 75% (meaning that no more than 55% of net income pays for housing and other debt), and a combined loan to value ratio of 90%, meaning that the borrower is paying a 10% downpayment.

Subprime can offer an opportunity for borrowers with an allegedly less than ideal credit record to gain access to credit. Borrowers may use this credit to purchase homes, or in the case of a cash out refinance, finance other forms of spending such as purchasing a car, paying for living expenses, remodeling a home, or even paying down on a high interest credit card. However, due to the risk profile of the subprime borrower, this access to credit comes at the price of higher interest rates, increased fees and other increased costs. Some of these costs are often hidden to the borrower.

http://www.revver.com/video/789221/subprime-lenders/

Generally, the credit profile keeping a borrower out of a prime loan may include one or more of the following:

* Two or more loan payments paid past 30 days due in the last 12 months, or one or more loan payments paid past 90 days due the last 36 months;
* Judgment, foreclosure, repossession, or non-payment of a loan in the past;
* Bankruptcy in the last 7 years;
* Relatively high default probability as evidenced by, for example, a credit score (FICO) of less than 620 (depending on the product/collateral), or other bureau or proprietary scores with an equivalent default probability likelihood.
* Accuracy of the credit line data obtained by the underwriter.

No Cost Refinance

Nineteen mortgage companies are under investigation by the FBI.

This number is up from 17 in March.

There’s a ton of financial fraud the FBI is digging into, particularly in relation to the subprime mess.

Countrywide, the biggest subprime lender, is under FBI investigation.

Big surprise.

I’m sure Congress is salivating at the prospect of putting subprime lenders on the witness stand and berating them for the credit crisis.

By Randall Mikkelsen

WASHINGTON (Reuters) – The FBI’s probe of potential fraud in the U.S. home mortgage industry now encompasses 19 companies, up from 17 a month ago, agency director Robert Mueller told Congress on Wednesday.

He said there was no end in sight to the growth of individual and corporate fraud cases, and the Federal Bureau of Investigation was reassigning agents from other areas such as financial fraud and health care to cope.

Equity Loan

“We’ve had a tremendous surge in cases related to the subprime mortgage debacle. We currently have almost 1,300 cases that have grown exponentially over the last several years and we expect them to grow even further,” he said.

“We have also 19 cases involving institutions themselves where mortgage fraud may have contributed to misstatements and the like,” Mueller said in testimony before a Senate appropriations subcommittee.

Bureau officials declined to name any additional companies targeted in the probe. “We’ve always said it was a fluid number,” FBI spokesman Stephen Kodak said. “It could change at any time.” He said the bureau has publicly acknowledged only one company as involved — Doral Financial Corp (DRL.N: Quote, Profile, Research).

A former Doral treasurer was indicted for investment fraud last month. He denied the allegations and the company declined to comment.

The largest U.S. mortgage lender, Countrywide (CFC.N: Quote, Profile, Research), also is under FBI investigation, authorities have said, although the FBI has declined to comment and Countrywide said it was unaware of any investigation.

When the FBI disclosed its industry investigation, major investment banks Goldman Sachs (GS.N: Quote, Profile, Research), Morgan Stanley (MS.N: Quote, Profile, Research) and Bear Stearns Cos (BSC.N: Quote, Profile, Research) each said the government had asked them for information, but there was no confirmation of any FBI role. Beazer Homes (BZH.N: Quote, Profile, Research) said last year it had received a federal grand jury subpoena related to its mortgage business.

With the collapse of the Subprime mortgage market, the mortgage industry has changed dramatically in recent times. Many of the more liberal mortgage programs have been discontinued. How will this effect the demand for first time home buyer loans?

From approximately the year 2000 until the year 2004 interest rates were continually lowered, reaching multi-decade historic lows by late 2004. This historic reduction in interest rates fueled a multi-year bonanza in the real estate industry. Real estate prices were escalating rapidly with each passing week, and it seemed that everyone wanted to be involved in real estate.

That included lenders, who were eager to gain new customers. In the frantic race to make as much profit from real estate as possible, lenders lowered their standards and created new lending requirements that were so lenient it seemed that anyone with a pulse would qualify!

Loose lending standards, historically low interest rates, and rapidly rising real estate prices added up to the perfect formula to attract millions upon millions of people, and create a real estate bubble along the way.

And that is exactly what happened.

And then disaster struck.

In August of 2007, the subprime home loan industry begin to break down. Large investors, monitoring the default rates of mortgage portfolios and concerned about the continuing drop in real estate prices nationwide decided to stop purchasing subprime loans. By late fall of 2007 the entire subprime industry as we knew it was gone.

For the First Time Home Buyer, as well as seasoned real estate investors, it was easy to take advantage of the lax guidelines offered by these lenders. They had flocked to the real estate market in droves. And then suddenly, the subprime market came to a screeching halt.

With the downfall of the subprime industry, millions of potential home buyers are now searching for alternative mortgage products that will accommodate their financial and credit profiles.

Does this mean that first time home buyers will no longer qualify for a home loan? No. There are other alternatives besides the subprime mortgage loan.

There are several solutions. Fannie Mae‘s American Dream Commitment offers the most exciting, affordable first time home buyer loan solution that we have seen. To quote Fannie Mae, “Many Americans still are being overlooked, underserved, and overcharged in their search for affordable homeownership.” In defining their goals, Fannie Mae strives to “expand access to homeownership for first time home buyers and help expand the minority homeownership rates with the ultimate goal of closing the homeownership gap entirely.”

This commitment translates into flexible, accommodative, and low cost home financing available to first time home buyers with less than perfect credit and restrictive budgets. But that’s not all. Reading into the guidelines carefully one will discover some amazing and thoughtful criteria. Amongst these guidelines are included a surprising and liberal allowance for “undocumented income”, expanded seller contribution tolerance, and a complete absence of saving and asset reserve requirements. All of these flexible rules make possible the lowest cost, no money down mortgage program available anywhere.

Credit score requirements are now the easiest of all of the First Time Home Buyer Loan programs available in the home loan market. The guidelines provide for a score of 620, but with moderate compensating factors lenders may grant loans with scores as low as 600.

In addition to this program, nearly every state offers some form of down payment help for first time buyers. These buyers are not completely shut out of the market. There remains ample state and Federal funding for First Time Home Buyer Programs.

Home Refinancing

The Des Moine Register reports about the new harsh reality:

Lenders are making more requirements of borrowers. They want higher credit scores and more money down and more proof of income.

Mortgage defaults have forced banks to write down about $250 billion in the past six months in American mortgage losses.

The credit crisis started with subprime loans.

Risky mortgage options are faulted for the continually rising foreclosures and the resulting write- downs banks have had to make. Contributing to the problem were:

Refinance Home Mortgage

– The now notorious 2-28 loans. This mortgage carried a low initial interest rate that typically adjusted upward after its first two years, lifting a buyer’s monthly payment by 50 percent or more.

– Zero-down loans, where the buyer had to put nothing into the deal to get into a house.

– 80-20 loans, which carried a traditional mortgage for the first 80 percent of the value of the home, and a second, more costly loan to finance the remaining 20 percent.

– Stated-income loans – nicknamed liar loans – where the buyer did not have to prove how much money he or she made.

Those kinds of loans are gone, or at least in hiding, said Des Moines mortgage banker Randy Stevens.

“The 2-28s are history,” said Stevens, a director of the Iowa Association of Mortgage Brokers. As for traditional adjustable-rate mortgages, or ARMs, he said they remain but are little-used because their rate is little better than what a buyer can secure on a fixed-interest mortgage.

Refinance Mortgage Rates

Market correcting

At Neighborhood Finance Corp., which mostly provides fixed-rate loans in Des Moines, Executive Director Holly Olson said she has heard less and less these days about non-standard loans.

That’s largely a result of market forces at work, she said. As home foreclosures have risen over the past six months, institutional investors that buy blocks of these types of loans have halted their purchases.

Also contributing to the decline: Many suppliers of mortgages have been shuttered, including First Federal Financial Corp. and Shearson Financial Network Inc.

Others encountered financial difficulties and have quit making certain types of loans. Wells Fargo, Iowa’s largest bank and the nation’s largest retail home lender, for example, quit making 2-28 loans last year.

At Citizens for Community Improvement, organizer Danny Wagener worries the pendulum of correction may have swung too far toward tightening credit.

“We’re concerned about it,” he said. “We’re trying to fight two battles at once.”

The Des Moines citizen- action group is fighting against foreclosures caused by easy credit and the corrective changes by lenders that dampen home buying.

Joe Rogers, an executive vice president with West Des Moines-based Wells Fargo Home Mortgage, said opinion is divided on whether lenders have gone overboard in tightening credit. Borrowers may think that’s the case, he said. But investors – hedge funds, for instance – that hold billions of dollars’ worth of defaulted mortgages may yearn for still more protection.

Putting down cash

While Des Moines has been a relatively stable market compared with southern Florida or Las Vegas, corrective measures apply across the country.

As lenders and mortgage insurers back away from 100 percent loans, down payments are now much more important, Rogers said.

Lenders want buyers to commit some amount of cash to what will probably be the largest purchase they’ll ever make.

Nontraditional financing is still available in Des Moines, though qualifying standards have been raised.

At the Village of Walnut Grove in Urbandale, for instance, builder Triton Homes is advertising new town homes with “no money down.”

Lee Ann Sloan, a real estate agent handling the property, said that Triton has agreed to cover 3 percent of the purchase price. That leaves the buyer responsible for 97 percent, which Stevens said is generally the maximum amount of financing any lender will agree to nowadays.

Sloan said she hasn’t encountered buyers who are nervous about tightened credit standards. But those people probably have already decided to sit on the sidelines for a while.

Better scores

When buyers do get ready, they’ll find lenders will expect more of them than in the recent past, particularly in the way of credit scores.

Cade Lindaman, mortgage manager at Community State Bank, said a loan that would have been granted last year based upon a credit score of 680 or higher will now require a credit score of 700.

That same loan, made with a loan-to-value ratio – the percentage of the value of the home that is loaned – of 80 percent, may now need a 70 percent, she said.

“It’s a little tougher to qualify in general,” said Lindaman.

Many of the loans that were around last year are still available in some form this year; they’re just harder to get.

Lenders also will take a sterner look at what remain the three biggest factors behind whether a loan will be granted – credit scores, loan-to-value ratios and debt-to-income ratios.

There’s no single magic number that will qualify someone for a loan.

Each lender sets his or her own rules on underwriting, and other influences come into play.

Still, as SaBreena Boyd has realized, the higher the credit score, the better.