Is Now a Good Time to Buy a House?

Aug. 1, 2008 -- Loan standards may have tightened some, but mortgage rates still are historically low, even if up from a year or two ago, according to local lenders.

With the decline in home prices this year, "Now is a good time for renters to get up off the couch and look for a home to buy," said James Woolery of Dove Mortgage in Richmond, Kentucky.

"In a year or two, after the housing market has recovered," some renters will regret not having bought a home this year, he said.

Interest rates can vary from day to day, but fixed-rate, 30-year loans at rates of 6.25 to 6.75 percent are available, according to a sampling of local lenders.

Someone who qualifies for a Federal Housing Administration (FHA) or Veterans Administration (VA) loan may not need a down payment, Woolery said.

"You'd be surprised who qualifies for an FHA loan," he said. "There's really no income restriction," even if loan size may be limited.

Many conventional lenders require a down payment of at least three, or even 10 percent.

"That's still better than 25 years ago when you needed a 20 percent down payment to get a home loan," said Jeff Fultz of Central Bank.

Lenders also want customers to have good credit scores.

"We encourage people who have minor issues in their credit history, such as an unpaid medical or cell phone bill, to get them settled so they can get their credit scores up," said Tim Edwards of Cumberland Valley National Bank in Richmond.

Too many credit cards also can lower credit scores.

"You shouldn't have four or five credit cards, if you really need only one," he said. Even several credit cards, however, if they are well managed, may not hurt a credit score, he said. "If you're buying a modest-sized house, and you have some money set aside, we can probably get you an FHA loan," Edwards said.

In the five markets that CVNB serves, the number of mortgage loans has remained fairly constant, he said, but loan size has decreased, because, "People are buying more lower-end homes."

Some lenders can work with customers who have less-than-stellar credit scores.

"As a community bank, we make loan decisions on an individual basis, not simply on credit score calculation," said Tim Houck of Community Trust Bank in Richmond.

"We realize that people may have had difficulties in the past that were beyond their control, so we try to work with them," he said.

Because of its conservative lending policies, Community Trust Bank has not had as many foreclosures as some institutions, Houck said.

"This is a buyer's market," Fultz said, "But I tell prospective buyers to come to the bank before you go shopping for a home. We can get you qualified and help you determine how much house you can afford and get a monthly payment you can live with."

Federal legislation signed Wednesday to shore up the federal-sponsored mortgage companies known as Fannie Mae and Freddie Mac should help restore confidence in the housing markets, said Theresa Burdette of Lanco Mortgage.

The legislation also contains provision to help borrowers avoid foreclosure.

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