OMG! Why Are Home Loans Getting So Difficult To Get? A REALTORS® Perspective On The Current Mortgage Market! By Cindy Cranston - Total Edge Team
Disclaimer: I am not, nor do I proclaim to be, an expert in the mortgage industry. This post is written form my perspective in dealing with my personal real estate clients while they worked to get their home loan.
Lately getting a real estate loan is no easy task. The buyer has to have a longer rental history, longer job stability, and much higher credit scores than just a couple years back. The good old days are gone for good. Times have changed and the lending industry has adapted and changed too.
What exactly Changed? The 3 Biggest Changes!
•1. FICO scores-Most lenders are unable to lend if the borrower or co-borrower fall below the 620 average. The borrower must not show collections, slow payments, or non-payments on their credit accounts within the past 1-2 years. The borrower must have and be able to prove a 1-2 year rental history if they have not owned a home.
•2. Down Payment- Zero down is no longer an option, buyer's need money to put down, in most cases. FHA loan down payments have increased to 3.5% in 2009. Conventional loans take 10-20% minimum down payment.
Note: Some areas offer USDA loans where the borrower can qualify for a -0- down loan. These loans require USDA underwriting approval and minimum credit scores. Also VA loans still allow for the borrower to buy with -0- down. VA loans must meet specific guidelines for qualification, as well.
•3. Non-Occupants-If the borrower is not going to primarily reside in the property then most lenders will no longer lend without much higher interest rates and a substantial down payment.
These changes and many others have created an environment where now more than ever it is important to get pre-approved before looking when buying a home. Getting pre-approved for the loan amount you can borrower saves both the REALTOR® and the buyer time. No one wants to be looking at mango's when the can only afford an orange.
Do not set yourself up to fail before you've even gotten started, ‘Get Pre-Approved' before you start looking for your next home.
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Cindy Cranston and Faye Taylor are REALTORS© with Keller Williams Heritage living and doing business in the South San Antonio, Floresville and La Vernia, Texas market. She represents both homeowners and home buyers in these areas.
"The Total Edge Team is Your Key to a Competitive Edge in the San Antonio, La Vernia and Floresville Real Estate Market!"
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