Mortgage mess complicates home buying

The Miami Herald reports:

If you're in the market for a mortgage these days, you'd better have good credit and be willing to come up with a substantial down payment on your dream home.

As world financial markets reel from a spreading credit crisis sparked by the meltdown of subprime loans and liquidity problems at lenders such as Countrywide Financial -- the largest mortgage lender in the nation and Miami-Dade County -- South Florida lending markets are suffering, as well.

For now, local lenders are avoiding exotic loans that cropped up during the real estate boom and are returning to more traditional and stricter lending practices. Fast disappearing are loans that allow buyers to finance the entire purchase price of a home or make very low payments upfront with large balloon payments in a few years.

Miami-based BankUnited, which has 83 branches in Florida, is looking for bigger cash down payments for mortgage seekers and wants to see slightly higher credit scores, indicating borrowers have a history of paying their loans in a timely manner.

''Lenders are definitely demanding better credit scores, and they're stricter with appraisers'' to avoid inflated home values, said Ines Hegedus-Garcia, a Realtor in Miami Shores.

Hegedus-Garcia said a few local banks remain willing to lend to foreign buyers, but they are demanding larger down payments as well.

It could also become harder to sell moderately expensive homes -- those between $500,000 and $1 million -- or to get a so-called jumbo mortgage exceeding $417,000, some brokers said.

The correlation between incomes and housing prices is coming back.