Getting a Home Loan Takes a Little More Effort

JONESBORO, AR (KAIT) -- We all know about the impact the mortgage crisis is having on people all across the country, but it is also having an effect on people here in Region 8.

Changes in the type of home loan you can get are causing home buyers to have to pay more money down than before.

"It's going to cost me about $3,000 by the time its over to get into the home," said Melissa Allen.

Melissa Allen is in the process of buying her first home.  She assumed that she could get a 100% financed loan, but that wasn't the case.

"In light of some of the things that have happened in the market, you actually have to have a down payment now.  Those have one by one slowly dropped off and 3% is your minimum investment with our FHA product," said loan officer Stephanie Nelson of The Mortgage Source.

Nelson said there are a couple of 100% finance loans out there like  rural development and VA loans, but for the most part home buyers have to rely on FHA and Conventional Loans that vary on how much you have to pay down.  Up until October 1, 2008 there was a program called Down Payment Assistance with the Federal Housing Administration, with that no longer available home buyers are required to pay some up front.

"Lenders are really looking for the customer to have some type of investment in that property so they'll be less likely to walk away from it," said Nelson.

"It's not that bad if you look at renting versus buying.  If you're going to put that money into rent, you might as well put it towards something you're going to own eventually," said Allen.

The home that Allen is in the process of purchasing is a foreclosed home.

"I'm giving less for my house than it's probably worth, probably because of that very fact it was a repossessed home.  Somebody couldn't pay for it and the market is so down right now that you can probably get a really decent home for probably less than what its worth," said Allen.

This is a buyers market, Nelson said with many looking to get out of homes in Region 8 there are a lot of good deals out there for people looking to buy.