Mortgage rates are low and home prices are most affordable but why don’t we see activity rise in real estate as much as we hope for if we’ve passed through the worse of the housing bubble? Well, for one it’s the end of the peak home selling and buying season. Even then, I still feel some uncertainty in the air. Are buyers still holding off spending as in other consumer goods because of fear of a still fragile economy? I don’t blame them. On the other side of the equation, for those who are seeing a good opportunity to invest on their own home, it is getting harder to qualify for a loan. And for this I absolutely don’t blame lenders either. I just wish they’d done this a lot earlier, we could have totally avoided this housing bubble. These two ends I think hold back the full throttle of economic recovery but what are we to do? It looks like even those in authority are lost in this economic tangle we found ourselves in.
I can only look at the more objective part of this whole situation which is the availability and accessibility of home loans. I had Bryan Smith, Senior Loan Officer of Cornerstone Mortgage Company in Houston answer related questions.
With stricter loan requirements nowadays, what are the chances of getting a loan for those with credit scores of 620 and below? Banks/Mortgage Companies are still hanging on to their money and have not loosened up yet. Within a month you will see all the banks moving up to 640 for a FHA loan. As far as credit scores under 620, I have seen no new programs yet, even with a large down payment. Money does not talk like it used to.
What could people in this predicament do to improve their credit in the shortest time so that they could still take advantage of the low mortgage rates & affordable home prices? It’s hard to answer this without seeing a credit report. Each credit report is different and different measures are needed to increase the credit scores. The easiest way to increase a credit score is to pay down balances to less than 30% of limit.
We keep hearing that mortgage rates are at an all-time low, when you do you think these rates will start to rise? I believe we will see the low rates until Spring or Summer of next year.
Do you see an increase in the use of FHA loans because of this change in mortgage situation? We have seen a major increase in our FHA originations. FHA is the easiest loan product to qualify for now. 620 credit score, higher debt ratios and a gift can be used for total move in. FHA Federal Housing Administration is a government entity that insures home loans against default. They have been in business since the mid 30’s. See if you qualify for this loan.
It may look like we hit a stalemate, low rates, affordable home prices but not much stir in real estate activity because less are qualified. I think we are just going back to what traditional loan qualification should be. Purchasing a home is an investment that requires responsible financial commitment. Lenders as well should do their own due diligence in assessing the risk of granting loans to prospective borrowers. I think when everybody’s responsible enough to understand and do their part, everybody is served well. No one loses loaned money, no one loses a home.