Virtually everybody in the business says the mortgage application process must be made less confusing and intimidating for new homebuyers. And just about every week, lenders announce new products and procedures.

The latest comes from First Home Mortgage Corp., Mount Prospect, Ill. It now offers preappovals by phone, usually in just five minutes. While such speed is dramatic, it's not greatly different from what a number of other lenders are offering.

Rather than boasting only about quickness, First Home is also talking about smoothing the emotional path for borrowers. "With obtaining a mortgage identified as one of the top three stresses in life, this innovation reduces anxiety," said John Manglardi, president. He also noted that it is a useful tool for realty agents because potential customers could find out quickly how costly a home they are able to buy.

Mr. Manglardi emphasized that the system also offers a higher degree of privacy and confidentiality because people do not have to fill out application forms under the eye of a loan officer in unfamiliar surroundings.

Announcements of products designed to appeal to first-time homebuyers have also been flowing regularly from the nation's lenders.

Fleet Mortgage Group, Columbia, S.C., is targeting first-timers with a homebuying guide that includes offers of a free credit report, a free mortgage prequalification, a moving-assistance program-and a free four-day vacation for those who close loans.

Like First Home, Fleet is trying to demystify the mortgage process. "Buying a home is a major investment of both time and money, and fear of the unknown may discourage some consumers," said Charles Begley, senior vice president of loan production at the mortgage unit.

Mr. Begley said he believes the guide and related offers are timely. "Renewed consumer confidence, stable interest rates, improving home pricing in most markets, and mild weather have made it an excellent time for prospective homebuyers to act," he said.

Fannie Mae has also been beefing up its programs for reaching this large market. In a progress report on its trillion-dollar commitment to finance housing for underserved markets, issued last week, Fannie said the number of loans it had funded for first-timers climbed to about 298,000 last year, up about 16%. Fundings to this group had risen 11% in 1995.

Fannie said it funded about $30 billion of loans to first-time buyers last year.

While it does not count all such loans toward its trillion-dollar commitment, it said many of the program's initiatives target first-timers.

The agency is expecting immigration to swell the ranks of first-time homebuyers in the next several years, and it has a variety of programs to make mortgages more accessible to the new residents. These include outreach programs and educational literature in several languages.

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