Four times annually, the Federal Reserve surveys 84 different banks about general banking conditions.
One of the survey questions asks about current mortgage lending standards and whether they are loosening or tightening.
The chart at right is from the April 2008 survey and it illustrates what we already know: It's getting tougher and tougher to get approved for a home loan.
Some of the areas in which mortgage guidelines are tightening are well-known:
- More thorough income documentation
- Higher credit score requirements
- More "money in the bank" post-closing
Some areas are less well-known:
- More scrutiny of prior delinquencies
- Strict review of appraised values
Overall, getting a mortgage approval from a bank is more difficult than in months past and the tightening trend is expected to continue throughout the rest of the credit cycle.
No "class" of buyers is immune, either -- not even the "prime" ones.
Home prices may fall going forward but stricter mortgage guidelines means that fewer home buyers will be able to take advantage.
If you're unsure about your credit profile, check with your loan officer to see how additional restrictions could impact your ability to purchase (and finance!) a home.
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I just stopped by to welcome you to Active Rain. I hope that you find it a great benefit to your business and that you see the value that I have also found here. I am from Charlottesville Virginia and using Active Rain has really increased my business!
My main blog on Active Rain is here: Charlottesville Real Estate Blog, not the link at the bottom of this post.
I hope you will look into the many groups as there are some great group both local and broad based,....
enjoy!