Banks have been cutting their home loan portfolios back, that is for sure, but the careful borrower can still locate a mortgage.

Smaller, community focused banks are still extremely active in the home loan business. This is not surprising. Mortgage loans originated with the old building societies, such as we see each year on “It’s a Wonderful Life”- taking Joe’s depositsto build Bob’s house. Even if they may no longer be called building societies, this focus has protected them in the recent mortgage market market turmoil.

They are actively granting loans to their customary clients and even expanding to absorb the slack where other lenders are no longer active.

While major banks project reduced loan volume in all categories, including mortgages, community banks expect stable numbers in loan volume for single family homes, although no increases.

Community lenders such as this, that may include credit unions and development banks, have had extraordinary success in lending to the so-called sub prime borrower, because they remain close to the customer they are lending to. These companies are not only staying in business, they are making a profit on their loans.

Take, for example, Shorebank, a small community lender serving that city’s poorer community; its delinquency rate is 3.1%, in comparison to the national average of 18.7%. These lenders charge market rates which are higher than the ones available to prime borrowers, and manage their risk prudently. And their goal is only to be profitable, not profit maximizing, a interesting point made by Mark Pinsky, the head of Opportunity Finance Network, an umbrella group for these types of banks. Should we read profit maximizing as “greedy”, a term that has been applied to most of the mainstream lending institutions that are now reeling from the sub prime mortgage crisis?

If you look at the salary of a CEO of one of these small community based institutes, such as that of Douglas Bystry of Clearinghouse CDFI, at $190,000 as compared to that of Angelo Mozilo, CEO of Countrywide Financial at $22.1million, you can realize the problem. The location of Shorebank is a modest renovated movie theatre, not an expensively built corporate complex.

These kind of lenders usually remain close to their customer base, and by doing so, they can monitor their portfolio and protect their assets better. Take the program managed by Shorebank that educates its borrowers in energy conservation to save costs, money saved that can help pay the mortgage.

There has been a major upheaval in the world of lending and home loans. What can we imagine wil happen? Is there any way to know if the rates will continue to go down?

Tight conditions in the lending world should normally lead to lower rates, since lenders would have to lower rates in order to attract customers with good credit ratings. But ironically, banks are tightening their purse strings for all borrowers and even the best cases are seeing higher rates.

This seems like a bad business decision; normally a business will lower prices when business is bad in order to get whatever business they can. Matters in the financial industry are far from normal, however, and credit card companies are also using this strategy of higher rates to increase revenue in this tight market.

It used to be that when the economy slowed down, lenders would lower their interest rates and this would add incentive to borrowers. Today, though, the financial industry is so disrupted that matters was considered normal before are not now.

What does all of this mean for someone who needs to decide if this is the right time to borrow for a home? Wait for this time to pass and for rates to lower or grab a loan now, while there is still some credit available, or wait for the fallout from the recession?

The economy is undoubtedly in a recession and some ar even talking about a depression, which would lead to deflation. Deflationary tendencies normally mean decreased to even negative real interest rates, and that would mean borrowers ought to wait a little longer.

Some lenders are still actively seeking borrowers. Many small lenders never had the capital to delve into the massive home loan programs that many of the larger banks did. This was because a lot of them were too small to expand into this highflying arena of subprime loans.

Another argument for waiting is that housing prices are also most likely not at the bottom and may fall an additional 10% over the 25% drop seen over the last year. A study of housing prices conducted by researcher Case-Schiller shows an average decrease of 17%, but some regions with home prices falling 25%. If the scenario is set not only for decreased rates, but also for lower home prices, it would seem smart to wait until more of the credit crisis fallout can be judged.

How much you pay for your mortgage insurance premiums will hinge largely on three factors. Even with the same policy, the premiums can be different based on how large the mortgage is, how old the insured is, and whether it is a smoker.

Both kinds of mortgage insurance-life to pay off the mortgage, or disability to pay mortgage payments-use these three things to calculate the premium.

Since the age and condition of the insured is one of the most critical determinants of when a policy will be paid, they are the most important determinant of the premium. A great many mortgage insurance policies do not even need a physical. This can be chancy, since any statement that would infer good health can be used negatively if the claim is processed and it turns out a health condition (or smoking) was hidden. Don’t think you can claim to be a non smoker and then collect on the insurance because the insurance company didn’t realize. They will know, and if you have made incorrect statements on the application, you may jeopardize the entire insurance.

Recognizing this limitation, many companies now offer Regular (for smokers) and Non-tobacco, which is for applicants who do not now use tobacco or have not used it within the prior twelve months period. The smoker’s policy is of course going to be higher than the non smoker’s.

Keep in mind that insurance policies that are available without a physical have previously priced the additional risks into the premium. So those who are in very good health should consider taking the physical to see if lower premiums are available for him.

These factors can have a great effect on premiums, and the premiums for a 50 year old, with the same size mortgage, will be more than twice as much as that of a 38 year old. Lowering the loan amount insured will not change the premium that much. None of this is surprising, because the insurance business is based on increasing the collection of premiums and putting off paying of policies.

The mortgage figure has an affect at a given level, however. But up to about $250,000, the savings are low per each $10,000 difference in value. Larger mortgages need a higher premium and the insurance company will also insist on an assessment to prove the value of the property.

Nothing concentrates the mind as much as how much you are worth than purchasing a home. In an instant, you are responsible for an asset which is worth hundreds of thousands of dollars. You have probably already started considered protecting it via mortgage life insurance.

This is a great protection for your family in case of your death, but in the more likely instance of your disability, neither you nor your family will be protected.

The best way to decide how much you will require in terms of disability insurance is to consult with a financial planner or a life insurance agent. If done correctly, you can have a full analysis of all the costs of maintaining your home compared to your expected income if you should not be able to work.

If you already have disability insurance from your job or a government program, don’t expect that to cover what is most likely your single largest expense, your mortgage. You have to look at all of your debt when you consider being disabled. Other consumer debt, such as your car or credit cards, as well as other insurance policies, all have to be paid. Your disability policy will be unlikely to cover all of those costs and your mortgage expenses as well.

There are a number of features to be conscious of when shopping for mortgage disability insurance for instance the benefit period, the elimination period and optional riders.

The simplest feature is the benefit period, which is how long you will be able to receive benefits. This is usually through 65 years of age, but if you can shorten that amount of time, you can save a lot in premiums. For example, if your spouse may be collecting retirement benefits before then, or if you can start withdrawing your own retirement benefits without penalty.

The next area of interest is the elimination period, how long your disability must exist before you can receive a benefit. Needless to say, the longer the waiting period, the less the premiums. If you are in the habit of saving for emergencies, these funds may carry you over for a length of time before a longer term benefit is needed.

There are often riders that may or may not appeal to each homeowner. A common rider is a cost of living rider, that will increase the benefit according to recognized cost of living increases.

Since there are so many options to examine, it is important to understand them before you buy mortgage disability insurance. This allows you to ask the best questions and get the right policy.

When you apply for a mortgage, you will probably also be given the option of taking mortgage life insurance. Many banks will offer mortgage insurance, but you dont have to get your insurance from the same place that you get your mortgage. (An exception is purchase mortgage insurance, the kind the lender insists you to take out to protect them when you have a low home deposit.)

Once you start to receive offers, from lenders or insurance companies on mortgage life insurance, have a look at all of them for the best offer.

Dont leave out the internet as a resource for some really good quotes. When you shop this manner, it is very easy to compile a chart of costs and benefits for each policy. In addition, online sales are often cheaper because the processing costs are less. Insurers can make these offers since the cost of doing business on line is very much cheaper than in person.

Online offers will frequently give you a mortgage insurance worksheet that allow you to calculate how much coverage you need on your home. Just print a few copies and half the work is done for you: you only have to fill in the amounts and terms of the policies you are comparing.

Another feature to shop for is the amount of coverage you can get with each insurer. And dont forget to ask about policies that offer more than one coverage. One insurers policy on a death benefit may be more expensive, but if it is combined with disability, may turn out to be cheaper than other policies.

Shopping around for the best deal in life insurance on your mortgage may seem like a lot of work in the beginning, and may even cause some confusion, but it is an exercise that is well worth while. When you think about how long you will be paying the premium for this insurance, you can see that getting the best policy for your money while save you a lot of money over the course of the loan.

Just taking the first offer that comes up is not the smartest choice. Get at least a couple of quotes to make sure your lender is not completely out of line with others. If you change your mind or find a better policy later, that will be lost funds, or you may be dangerously underinsured when the time comes that you need it. A hidden advantage to looking around is that you may find features that are important to you that you hadnt thought about at first.