Saving up to buy a Columbia SC home might not be as much of a challenge as it used to be, now that the Federal Housing Finance Agency (FHFA) will allow some first-time homebuyers to make down payments of as little as 3 percent on Columbia SC mortgages.

Why Down Payments on Columbia SC Mortgages Are Going Lower

The goal is to make homeownership more accessible than it has been in a tight post-recession mortgage market. These low-down-payment loans apply to 30-year, fixed-rate Columbia SC mortgages guaranteed by Fannie Mae and Freddie Mac. The agency regulates Fannie and Freddie, which guarantee the majority of U.S. mortgages.

If you want to buy a Columbia SC home but don't have enough cash on hand for a down payment and closing costs, you might be able to qualify for an affordable home loan. Keep in mind lenders will require you to pay private mortgage insurance (PMI) if you pay less than 20 percent upfront, a cost homebuyers often overlook when determining how much they can pay.

One of the first things you'll want to look at before applying for any of the various types of Columbia SC mortgages is your credit score.

Credit Scores When Applying for Columbia SC Mortgages

There are a lot of different credit scores out there, and this has naturally led many consumers to ask: Which credt scores should I pay attention to, and what's my real credit score? People gravitate to the well-known FICO score, (FICO) by all accounts is the market leader in credit scores (meaning more banks use FICO scores than other scores). In fact, many refer to non-FICO scores as "FAKO" scores, but is that really an accurate assessment?

Most lenders have a baseline credit score by which they largely make their decision to approve or deny applicants for Columbia SC mortgages. The maximum credit score is 850 (though a score of 850 is rare, indeed. Only about 10% of applicants have a score over 800). Any score in the 700s or above is excellent and will get you a loan with the lowest interest rate. When you get into the 600s it starts getting dicey. A score of 680, for example, is still considered good, but when you get below 660, some lenders start saying, "No."

Most people don't realize they have more than one credit score, and just because you pay for your "Fico Score" doesn't necessarily mean you're seeing the same score a lender may be pulling and using to determine whether you qualify for any of the Columbia SC mortgages they may offer.

Your credit standing not only affects the mortgage rate you may qualify for, it also impacts how much you must pay in PMI. You can also get rid of PMI after you've built a certain amount of equity in your home, among other requirements, but it's on you to go through the process of removing PMI from your loan.

With the new directive from the FHFA, buying your first Columbia SC home may be more attainable, but the decision requires just as much careful thought as it would if you needed to put down 20 percent of the home's value to get a mortgage. Consider the overall impact on your life of buying a home, and make sure your credit is in good shape before applying for any of the many Columbia SC mortgages available from most area lenders.

Get more information about becoming a Columbia SC homebuyer and news affecting mortgage rates and qualifications in our section on Columbia SC Mortgage Info to your right under Columbia SC Real Estate Categories.

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Mortgage giants Fannie Mae and Freddie Mac announced recently that first-time Columbia SC homebuyers may be seeing a game changer with lower 3 percent down payment requirements. This is designed to expand credit for qualified home shoppers who may have been sidelined the last few years because of higher down-payment requirements.

A recent examination of what's holding back Columbia SC homebuyers argues that the down payment is the biggest challenge for first timers.

These loans will meet Fannie Mae's usual eligibility requirements, including underwriting, income documentation and risk management standards. These loans will require private mortgage insurance or other risk sharing, as is required on purchase loans acquired by the company with greater than 80% LTV.

Any Columbia SC homebuyers can take advantage of Fannie's loans as long as at least one co-borrower is a first-time buyer.

New Option Not Just for Columbia SC Homebuyers

Eligible homeowners who wish to refinance their Fannie Mae-owned mortgage but do not qualify under the Home Affordable Refinance Program can refinance their loan up to the 97% LTV level under a limited cash-out option.

Fannie Mae says it has implemented prudent risk management practices to ensure that loans the company acquires are appropriately underwritten, including mortgages with lower down payments. These include essentially eliminating risk-layering on purchase money loans, requiring income documentation to avoid "low-doc" or "no-doc" lending, and requiring income verification.

Fannie Mae has also worked to provide lenders with greater clarity on what circumstances would result in a loan repurchase request. Some lenders have said that uncertainty around these requests has led to them curtailing mortgage availability. This new clarity is intended to help lenders make mortgages to more creditworthy borrowers.

Similarly, Freddie Mac announced its Home Possible Advantage program, an affordable conforming, conventional mortgage with a 3% down payment to help more first-time Columbia SC homebuyers jump into the market.

Get more information about becoming a Columbia SC homebuyer and news affecting mortgage rates and qualifications in our section on Columbia SC Mortgage Info to your right under Columbia SC Real Estate Categories.

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In October, Fred Watt, the director of the FHFA, announced that he plans to allow 3% down payment mortgages for the many financial institutions that Fannie and Freddie guarantee. He states that his intention is to include more minorities and people who had their savings wiped out by the Great Recession re-enter the housing market. This comes at a time when U.S. homeownership rate has fallen to 64.4% from 69.2% in 2004 as blacks, Hispanics, and first-time buyers struggle to qualify for loans. Is this just more huge mortgage mistakes about to happen all over again? Many think so.

Repeating the Same Mortgage Mistakes Again

Some financial industry executives and lawmakers, Republicans in particular, are calling Watt's move an irresponsible opening of credit floodgates that could contribute to the same mortgage mistakes made before, and another economic meltdown. The chairman of the House Financial Services Committee (Jeb Hensarling) stated that Watt's plan returns to the policies that originally caused the housing crash. He went on to say "an invitation by government for industry to return to slipshod and dangerous practices that caused the mortgage meltdown in the first place and wrecked our economy."

The CEO of home builder Toll Brothers, Douglas Yearley, a New York Stock Exchange traded company, called Watt's plan "a really dumb" idea. Paul Wallison, a former Treasury official under Ronald Reagan and currently at the American Enterprise Institute wrote an article critical of Watt's plan that was widely distributed, including being published by the Wall Street Journal. Part of  Wallison's article stated, "Since the taxpayers are still standing behind Fannie and Freddie, it's clear who will have to pay the bill when these mortgage mistakes result in defaults in the future."

The director of Housing Finance Policy for the Urban Institute in Washington, Laurie Goodman, believes lowering the down payment requirement and keeping the other rules in place is a good first step in expanding the number of people qualifying for home loans.

One of the important rules that applies to low down payments is the requirement that borrowers obtain private mortgage insurance for any mortgage with less than a 20% down payment.

The goal is to ease lending to people with high credit scores but small savings accounts since credit scores are more important for staying current with a mortgage than the size of the down payment you made to get that mortgage.

What do you think? Is this heading in the direction of making the same mortgage mistakes again that thrust us into the recession in the first place? We'll keep you posted on the progress of this lowering of the down payment requirements.

Columbia SC home equity loans have nearly doubled this year, partly due to the continuous increase in the price of homes. The rise in home values has pulled more and more borrowers out from underwater.

While the share of borrowers that cashed-out some Columbia SC home equity has increased considerably over the past year, the refinance volume has also fallen sharply, resulting in a relatively small amount of equity cashed-out. Nationally, the volume of cash out refi's is roughly $8 billion, which is less than one-tenth of what we saw at the peak in mid-2006.

Columbia SC Home Equity Loans Save on Interest

The good news, to put it into numbers, those that lowered their payment by refinancing into a cheaper mortgage rate will save more than $1.5 billion in interest payments over the next 12 months of their new loan.

On average, that's an interest rate reduction of about 1.3 percentage points — a savings of about 24% On a $200,000 loan, that translates into mortgage interest savings on average of about $2,700 during the next 12 months.

Freddie Mac released these figures recently about Columbia SC home equity:

• Of borrowers who refinanced during the third quarter of 2014, 36% shortened their loan term, a 4% decline from the previous quarter. From 1990 through 2013, on average 28% of borrowers shortened their term.
• About 72% of those who refinanced their first-lien home mortgage maintained approximately the same loan amount or lowered their principal balance by paying in additional money at the closing table, unchanged from the previous quarter. Twenty-eight percent cashed-out some of their Columbia SC home equity, the highest share in five years; the peak on cash-out share was 89% during the second and third quarters of 2006.

We have more articles concerning refinancing and Columbia SC home equity loans in our Columbia SC Mortgage Info section of articles under Columbia SC Real Estate Categories to your right.

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Anyone who has applied for a Columbia SC mortgage recently knows how elusive the best interest rates, loan terms and ultimate mortgage loan approval can be. The good news is that steps can be taken to vastly improve the odds, but you need to take some of the steps for getting that Columbia SC mortgage before you even apply.