Theoretically interest rates were lowered to stimuate the economy. IMHO, the wrong "number" is being lowered. It used to be pretty much anyone with a 600+ FICO could get a loan. Now I can understand that people with FICOs way below 600 having difficulty getting a loan and they definitely shouldn't be getting 100% financing. Anyone who hasn't been able to save 5% (or have other assets or excellent credit) doesn't have what it takes to make a huge mortgage payment. In the Bay Area, most mortgage payments create huge payment shock. But I digress...
I think that people in the mid-600--maybe even low 600--FICO score range should be able to get loans--and not at "usurious" rates of 8% or more. But a lender friend of mine says that the investors don't want to buy them. I have a friend going through a re-fi for a measly $50K cash out and it's a nightmare. Despite never being late on a mortage payment on this property for 10 years and, whereas trying for 80% LTV, was willing to go 70%. One FICO is 683, another is 677 and the lender insists on 680! What happened to 660 being good?
Many good people have made 1-2 mistakes--or had inaccurate info put into their credit file--and it's difficult to straighten out. I know, I've tried. It's we who have to prove our innocence not they who must prove our guilt. Contrary to the American judicial tradition, with FICO scores, Americans are guilty until proven innocent. It's a racket and I wish we could go back to a simpler time when a handshake and one's word meant something. Oh, the halcyon days of youth! What happened to trust and integrity???
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