Battling Home Loan Challenges

MINNEAPOLIS - Getting a loan isn’t what it used to be. A couple of local lenders told Fox 9, they’re only able to help about one in every five clients. Qualifying for new government programs to modify or refinance is another difficult situation.

Jeremy Holt can’t even begin to count the documents and the time he’s spent hoping to secure a home loan. Holt said, “Put it this way, I’ve never been so stressed out in my life.” After a month of searching for pay stubs, tax documents and more, Holt and his girlfriend have learned they’ll likely qualify for a mortgage loan.

Many borrowers are finding out the hard way, they don’t meet minimum standards. Joe Metzler of Mortgages Unlimited said, “We’ve gone back to old school underwriting, which means you have to have a down payment, have to have okay credit scores, and have a little bit of skin in the game.”

Metzler said typically, conventional home loans require borrowers to have a credit score of 660 or higher and a five per cent down payment. To qualify for an FHA loan, borrowers usually need a credit score of 620 or higher and a 3 ½ per cent down payment. Metzler said his clients have had some success refinancing home loans through the federal Making Home Affordable Program. To qualify, a mortgage can’t exceed 125% of the home’s current value. For example, if your property is worth $200,000 and you owe $250,000, you may qualify.

Those who don’t, may be able to take advantage of a “loan modification” from their lender. Metzler said, “If you called three months ago, six months ago and you had frustration, you should try again.” He believes lenders are getting more familiar with the requirements and able to help more clients.

For Jeremy Holt, getting a home loan feels like a fresh start. The paper work is just part of the process. “Just watching what we’ve done through the last five to ten years, so we can actually purchase a house, and it feels really good,” said Holt.