First-Time Buyers can be in the Money

First-time buyers can be in the money!

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 downpayment 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 downpayment,” 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.”

Key lending ratios for first-time borrowers

• Total debt - including student loans ¬ shouldn’t exceed 50 percent of gross monthly income. That includes property taxes and insurance.

• Total housing payments ¬ including property taxes and insurance - shouldn’t exceed 34 percent of gross monthly income.

© 2007 Milwaukee Journal Sentinel, Joanne Cleaver. Distributed by McClatchy-Tribune News Service.