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The housing crunch is claiming another casualty with further limitations to your loan to value qualifications


The real estate market is slow to recover from the down ward spiral it has faced in the past year, lenders are increasingly making underwriting restrictions more difficult, including a wrinkle to the loan to value limits.

The amount of money you can request when considering a mortgage refinance may be significantly less than you were originally prepared for. Home owners who are identified as living in declining real estate markets are now facing and additional five percent reduction to their mortgage's loan to value allowance on a refinance. This reduction is a little known restriction that most lenders are adhering to in the underwriting guidelines from Freddie Mac and Fannie Mae who are now facing the burden of securitizing almost all of the mortgage backed securities in the market with the erosion from the credit markets. There are now a growing number of areas in the country where real estate values have declined year over year and thus triggering this restriction on a county wide basis. The loan to value restriction will also be a burden on home owners who are trying to purchase a home in one of these markets. The danger with this cycle is that it is eliminating a number of first time home buyers in the marketplace, a key component to bring the real estate markets out of their slump. Borrowers may wish to look into fha mortgages as an alternative as they do not have the deckling market restrictions and only require a 3% down payment.

2-10-2008 ? LoanNetwork.com





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