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Tighter Mortgage Standards
With almost two-thirds of U.S. banks having raised their standards for mortgages to their most creditworthy borrowers, three-fourths of U.S. Banks made it more difficult for people with limited or bad credit to get loans.
According to a June 11 report by the Washington-based Mortgage Bankers Association, eighteen percent fewer mortgages will be written this year compared with last.
However obtaining a mortgage is not impossible.
Mortgage lenders are interested in traditional mortgage buyers who can document their income and assets and don't have sizable debts relative to their income. Potential buyers can no longer put 10 percent down. Most banks are asking for 15 to 20 percent, or even more. 80 is now the new 90! And mortgage lenders are closely looking at factors such as:
Credit ScoresA borrower's credit score - aka FICO score, is a chief determinant of eligibility for loans. Most applicants now need a score no higher than 660, whereas some lenders are not willing to go below 720.
Debt-To-Income Ratio This is the percentage of a borrower's income that goes toward paying debt. Lenders calculate it two ways: By the front-end ratio, which includes housing costs like the mortgage principal and interest, mortgage insurance premium, ... more

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