How to Navigate the Mortgage Market as a Home Buyer in Marin
I was reflecting back on the roller coaster ride we've all witnessed within the mortgage industry and came upon an article entitled Fannie Mae Eases Credit To Aid Mortgage Lending which first appeared in the New York Times on September 30, 1999.
This article from 1999 makes for an interesting read and helps underscore that the credit crisis we are in today stemmed partly from political policy decisions made over a decade ago. All finger pointing aside, the backlash of any financial crisis is the pendulum swinging to the opposite extreme. The days of sub-prime lending and mortgage qualification without income verification are gone and underwriting standards have tightened drastically across the board. For conventional loans, Marin County home buyers need a 680 credit score or better and cash on hand for a down payment.
Here are some general guidelines to help you determine if you can qualify for financing;
- Conventional mortgages are still readily available up to $729,000 with as little as 10% down if you have a credit score above 720. Any loan over 80% financing requires that you pay monthly mortgage insurance.
- Any mortgage over $729,000 will require a minimum of a 20% down payment.
- Portfolio jumbo mortgages are available up to $4,000,000 or higher but you typically need a 30% or sometimes as much as a 40% down payment and a credit score above 680.
- FHA Mortgages are available in Marin County up to $729,000 with as little as a 3% down payment. You will need to pay mortgage insurance.
- Mortgages on investment properties requires good cash-flow and between a 25-40% down payment.
- Qualifying ratios are 45%, meaning all of your combined debt and home expenses (taxes, insurance, principal and interest) must total less than 45% of your gross annual income.
If you have money saved for a down payment and a good income stream that you can document, now is a great time to be a new home buyer. We have moved from a sellers market to a very strong buyers market. The pendulum has swung and there are deals to be had, even in the normally unflappable communities of Southern Marin and San Francisco. Happy shopping!