URBALO

The stock market is going crazy. Hedge funds are going under. But for the average American looking for a home loan, the crisis in the subprime mortgage market may actually be good news.
Rates on 30-year fixed loans dipped last week, to 6.41 percent, according to the Mortgage Banker’s Association.

In addition, tightened lending standards stemming from the subprime crisis likely mean fewer buyers, pushing down home prices.
The one catch is this: You’ve got to be a buyer with good credit, a low debt to income ratio, a healthy down payment, verifiable income, and looking to finance less than $417,000 (the cutoff for so-called jumbo loans).

If you’re among the 10 percent of people with credit scores below 620 who need a subprime mortgage, things could get tricky.Someone with a credit score of 600 might have to pay as much as 9.5 percent, according to FICO, which provides lenders with borrowers’ credit ratings.

You could also run into trouble if your loan is for more than $417,00, the maximum amount that can be channeled through a government lender. Loans over $417,000 are considered “jumbo” mortgages, which have recently seen rates jump due to a perceived increase in risk.

So bottom line, you should not freak out about this situation, you should still be looking for the house that you want and if you’re confident that you’re FICO score and financial situation are in order, then nothing should stop you for getting the desired loan.