It goes without saying that the sub-prime mortgage fiasco has created a lot of problems for a lot of people. The number of homeowners who may lose their homes through foreclosures is staggering. Even with help from the government and from lenders, the number of foreclosures is expected to be in the millions over the course of the next few years.
As bad as all of this is, there is some bright news coming out of the current housing market mess, and that good news is that lenders are again returning to traditional mortgages as their main source of home loans.
A good way to think of traditional mortgages is a "back to basics" approach to homeownership. In the past, there were certain things that people needed to do or to have in order to qualify for a home loan. During the sub-prime period many of those tried and true issues were thrown out the window. Issues such as down payments, credit history, and wage levels were often substituted for more exotic and easier to reach requirements. Not anymore.
Traditional mortgages will almost always require some form of down payment. It is always in the buyer's best interest to put down as much as possible as this reduces the amount of money that will need to be financed. Higher down payments can also help eliminate the need for private mortgage insurance (PMI) which is money saved by the buyer.
Most traditional mortgages use a fixed rate system of financing. Unlike adjustable rate mortgages which can vary wildly over the course of the loan, a fixed rate loan stays the same. The buyer knows exactly what he or she has to pay each month and for how long. Fixed rate mortgage refinance usually runs for 15-, 20-, or 30-year periods.
Lenders are usually very keen on using credit histories as a part of the decision process for traditional home mortgages. Buyers who have established credit and good payment records will find it much easier to get a home loan than those who do not have good credit histories. On the surface this may sound a bit cruel but historically those with poor credit histories are often the ones who default on loans.
Perhaps the main reason so many lenders are going back to traditional home loans is that it provides added protection for the lender as well as the home buyer. Many of those who are currently under sub-prime mortgages are good and honest people but the loans they have are going to bring them financial troubles once the higher rates set in. Whether they are good people or not will not matter much when they are faced with losing their home. Some of these people would not have qualified for a traditional loan and while that would have kept them out of the home buying process, it would have also saved them from the financial woes they are going to have to deal with as their monthly payments begin to skyrocket. | 
