Navigating mortgage changes

There’s money for people who have shown financial responsibility, a lender said.

MCCLATCHY NEWSPAPERS

MILWAUKEE — Caught in the shifting rapids of mortgage lending, Billy Alt and Kim Le just recently moved into the condo they thought they were buying in August.

The condo they were buying was in the process of being converted from a rental unit to a condo, and that involved some fancy financial footwork — the kind of transactional footnote that caused barely a blip until this summer’s upheaval in the mortgage market.

They quickly reorganized the finances of the deal to keep it on track.

“If we had been looking just a few weeks earlier, it would have been perfectly timed,” said Le.

While credit standards have clenched up, driving many too-lax lenders from the field, plenty of financiers are looking for customers, say home lenders.

“It’s a very good time for first-time buyers,” said Susan Wommack, national account manager with LoanSifter.com, an industry database business in Little Chute, Wis. “The lenders who are still standing are very competitive, and service levels have gone up, too.”

“For people with good credit, who’ve shown some responsibility, and have some income to work with, there’s plenty of money,” said Kevin Kubacki, senior loan officer with Pyramax bank in Greenfield, Wis.

Because a reliable history of meeting mortgage payments weighs heavily in calculating credit scores, first-time buyers are at a bit of a disadvantage, he added, typically landing between 620 and 680.

That limits the types of mortgages that borrowers can get more than the interest rates they’ll pay. For instance, a first-time buyer hoping to snag a relatively rare no-down-payment loan these days hasn’t a prayer with a credit score of less than 680.

Kubacki and other lenders say that first-timers are finding good luck with government programs specifically geared for them, such as those offered by the Federal Housing Administration.

Restrictions are geared to include as many first-time buyers as possible, because that’s the whole point of such programs, lenders say.

Coming up with the down payment can be hard.

“The 100 percent financing programs have been popular, but people are rightfully wary of those, so we are returning to a 3 percent or 5 percent down payment,” said Joni VonAsten, underwriting processor and closing supervisor for Wisconsin Mortgage Corp. in Brookfield, Wis. “We’re going back to the standards that have always been in place.”