Dave Brunko, senior vice president of mortgage for Coastal Carolina National Bank, has read the stories touting a decision by mortgage giants Freddie Mac and Fannie Mae to accept loans with a 3 percent down payment and he isn’t sure what to make of them.
“I’ve read those stories and kind of scratched my head,” he said.
In the first place, Brunko’s not seen any advisories from the agencies that give him any details of the deal, and in the second place, the two already have a 3 percent down payment program.
The standards to get that kind of loan a tough, Brunko said, and nothing he’s seen or read so far has told him that anything’s different about the 3 percent program that’s recently made the news.
Loans now days rely on a potential borrower having good credit, good scores and a debt to income ration that doesn’t exceed 41 percent, Brunko said. The latter is a solid line that can trip up borrowers whose loan payments would put them paying more than 41 percent of their income to creditors for things such as automobiles and any number of items that can go on a charge card once a mortgage is added on.
Many people with less than pristine credit can get loans, but they likely find themselves saddled with payments for prime mortgage insurance as well.
TD Bank may have help there, though. It now offers some mortgage loans that don’t require PMI, which the bank says opens the mortgage market to many who couldn’t afford to get into it otherwise.
Brunko said that some borrowing standards are easing, such as Fannie and Freddie recently deciding that they would take loans where a 5 percent down payment came from someone other than the borrower.
“That was a big step in the right direction,” he said.
The Federal Housing Administration allows “gift” down payments as well, and Brunko thinks that Fannie and Freddie may have eased their rules to compete with FHA.
But Brunko’s not sure how all that may fit into the 3 percent down payment information now coming from the big guy and gal.
It could be just that he’s not patient enough, he suggested.
“Sometimes the wheels do turn slow,” he said.