Exotic mortgages, as well as some lenders, are a thing of the past. But the need to borrow to buy a home is very much present.
The lending landscape keeps changing fast, economists, mortgage brokers and lenders say, so homeowners and potential buyers need to stay current.
"I think the choices consumers will have will be much more constrained, as will the number of lenders," said economist Anirban Basu, chairman and CEO of the Baltimore-based Sage Policy Group.
Fixed-rate mortgages, the predictable 15- or 30-year kind your parents had, are making a comeback, with adjustable-rate loans getting a smaller share of the market, Basu said.
Whether interest rates will jump is unclear - though it is clear that skittish lenders are pickier about to whom they'll lend and at what rate.
"We are turning away people that we wouldn't have a year ago. They have a lower credit score, they already have more debt, things of that nature," said Hunter Bloch, a mortgage broker with Annapolis First Mortgage in Hanover and president of Maryland Association of Mortgage Brokers.
Meanwhile, home-builders are pushing for greater buyer initiatives, hopeful that if the lame-duck Congress won't help them, the new one will. Programs still exist to help buyers with a house, and more are in the works to aid troubled mortgage-holders.
We put together a list of mortgage questions and talked with experts to get the answers you need.
1. What is the $7,500 federal homebuyer tax credit?
What's billed as the $7,500 tax credit is more of a $7,500 no-interest loan, says C. Dennis Elliott Jr., a senior loan consultant with Advantage Home Mortgage Inc. in Potomac. It applies to a primary residence bought between April 9, 2008, and June 30, 2009. Buyers who haven't owned a home in three years can qualify for this credit amount up to 10 percent of the purchase price of the house.
But, experts say, it works like a loan because you have to repay the full amount over a 15-year period, with caveats. If you sell before you've repaid, and don't show a gain on the sale, you won't have to pay. But if you do show a gain, you have to repay.
2. How do I know how much mortgage I can afford?
"Get a dose of reality," says financial planner James F. Ludwick, of Main Street Financial Planning in Odenton and Washington. He counsels people to paint their financial portrait before taking a step toward buying.
