The current mortgage market seems to be constantly changing. Some individuals have false impressions regarding mortgages, which can affect the home financing they choose. By increasing their knowledge, they can make smart decisions and avoid foreclosure.
There are several common myths regarding mortgages and foreclosures worth addressing.
Some homebuyers believe that though bad credit auto financing is available, buyers with poor credit do not qualify for home loans. Mortgage guidelines are tighter since the housing bubble burst.
However, several large FHA lenders recently decreased their minimum FICO score requirement from 620 to 580. Buyers with a 580 score will need to make a larger down payment but can still take advantage of current low interest rates and home prices.
Income tax deductions for mortgage interest saved homeowners over $85 billion in 2008.
Though the National Commission on Fiscal Responsibility and Reform recently recommended reform called Mortgage Interest Deduction, this is unlikely to be adopted by Congress.
On a less positive note, the elimination of Freddie Mac and Fannie Mae is likely, which will make it more difficult and more expensive to get a mortgage loan.
Many people feel stuck in less than favorable mortgage loans because they do not have enough equity to refinance. Unless a homeowner is severely upside down, refinancing may be possible.
Qualifying homeowners with loans held by Freddie or Fannie can refinance up to 125 percent of their current home value. A Short Refi program offered by the FHA refinances up to 115 percent of current value.
When people become unemployed and cannot make mortgage payments, they often believe foreclosure is imminent. This was basically true, until recently. States hit particularly hard by the economic crisis have some new funds designed for unemployed homeowners.
One is the Hardest Hit Fund, which provides mortgage payment assistance of up to $3,000 monthly for 36 months.
