You may have heard reference to the "Credit Window".
You haven't? You will soon because it's closing!
Don't worry, it won't close all the way, just part way.
Maybe a little explanation is in order.
The term refers to the availability and ease of granting credit.
You've read the headlines and heard of the Sub Prime Meltdown.
That is in a large part to having the window too wide open.
Flash back to just last year,
In a land far, far away...
Welcome to Mortgage Land!
In
Mortgage Land, if you have a heart beat you are pre-approved for a 100% financing, just sign here!
You could say the
Credit Window was wide open.
Well it turns out that may not have been such a good idea.
- Those heart beat buyers tend to default on their loans and then the lenders start going under,
- Which drags down the Wall Street money guys,
- Which then wakes up Wally, the old man in the back room who's job is to open and shuts the window.
Ok, there is no "Wally" - he's a metaphor for the Free Market Economy and the forces driving it.
And there is no Mortgage Land either. But it did help paint the picture right?
The moral of the story is this:
The availability of credit (the power to borrow) is changing daily.
What was approved yesterday - may be denied today.
Rates and terms aside, here's an actual example of how the window is closing.
From an email I received today, 3/30/2007 from a Lender,
Full Doc:
CLTV 90.01 - 95%: minimum FICO is now 660 *
* That translates to if you have a FICO score of at least 660, AND you are able to go FULL DOC we may be able to get you a combo loan of up to 95%, but that means all your ducks better be in a row, all your T's better be crossed, and the sun better be shining on you that particular day. You'll also need to bring 5% of your own bucks to the table or all bets are off.
And now from an email I received a year ago on 3/31/2006, also from a Lender,
Stated Income:
100% LTV with scores as low as 580 *
* Loosely translates to "If you can fog a mirror, you can have a loan!" This is stated income documentation, one loan, and all with the score of someone who doesn't like to pay bills.
Can you see how the window is closing?
;)
;)
