Getting a Conventional Loan: Why it's become so difficult!

Why Getting a Conventional Loan is so Hard! 

After the housing market crashed in 2007 all of us in the industry have been anxiously waiting for the market to “hit bottom” so we can start to rebuild. I believe we did just this several months ago and now we are seeing a turn in the market. When prices and values were on the down-slope, it was unquestionably a buyer’s market; Interest rates were lower than we had seen them in forty years, prices were agreeable and economists had high hope that the market would experience an upturn which would immediately increase the value of your home. However, while all of this was happening, banks and independent lenders were making it very difficult to get a loan because of their list of requirements. While the market is currently changing, the latter piece of information is still unfortunately intact.

Recently the Realtor Mag released an article about this very topic and based on an article from the Wall Street Journal. Everyone is buzzing about the unfair “shopping list” that most lenders require their borrowers to meet. Nowadays they’re tightening their underwriting standards and documenting the occupant’s finances and ability to repay much more carefully.

Considering what the market experienced several years ago, I’m not surprised that many lenders are tightening up on who they’ll lend to.  This is making it very difficult for many people to buy a home when the market is ripe for it. I wouldn’t put it past a lender nowadays to question certain deposits, any increase in income, an overdue payment, etc. Apparently there are even some lenders who will request college transcripts and diplomas in this process.

One loan officer in Seattle, Rhonda Porter, told the Journal that “Any credit inquiries on a person’s credit invites red flags and more questions from lenders." So it’s the catch 22 of today’s financial scene: You need a loan but to do that they need to check your credit which sets off flags for lenders you may want to borrow from in the future or if the current one falls through.

So, if you are one of these people who is in need of a loan but can’t get one for some reason, eg. past bankruptcy, past foreclosure, bad credit, have the savings but not the income, etc. you may want to consider an alternative financing option. Hard money is a great way to jump into the real estate game if you are having difficulty getting approved elsewhere. This is a loan that you pay back at a higher interest rate but it has a lot fewer opportunities to be weeded out by an eligibility list. And, you can refinance down the line for lower interest rates once you do qualify – but you don’t miss out now!  If you’ve been thinking of purchasing real estate in California and are in need of this type of loan, give me a call!

Lynn Tardibuono – Flipper Chick- Real Estate Agent and Co-Owner of Sun Pacific Mortgage and Real Estate.  Serving Sonoma County since 1988.  Her number is (707)523-2099 and you can also visit our redesigned website at http://www.sunpacmortgage.com Also be sure to like us on facebook! Click this link!