For a plethora of reasons, the time to buy a home is now. The country is flush with available properties, historically low mortgage rates and major discounts in the housing sector. Although many consumers are very interested in getting their slice of the American Dream, fewer consumers are qualifying for the lowest mortgage rates in history.
Lenders are implementing new mortgage obstacles that consumers must conquer as part of the mortgage lending process. According to the Fair Isaac Corporation (developers of the FICO credit scoring system) around 43.4 million people are now considered to be high-risk borrowers, and lenders will not touch them with a 10-foot pole. If you long to buy a house of your dreams either now or in the future, you should know exactly what lenders expect from the next crop of home loan borrowers.
Employment and Income
In the past, some lenders would take a consumers’ word regarding employment at face value; that is no longer the case. Instead, consumers will physically need to prove that they are financially stable and pay stubs, tax returns and even bank statements may be required to build the case. Plus, many lenders are now calling up the employers of mortgage applicants to verify the accuracy of information supplied. Those who are self-employed have the additional burden of proving their revenue stream and must be able to document at least two years of income for loan approval.
Payment History and Credit Rating
Both the Federal Housing Administration (FHA) and private lenders have upped the ante for consumers interested in securing a home loan. In the beginning of 2009, the FHA officially raised the minimum credit score qualification for their loan opportunities from 580 to 620. Private lenders are now requiring consumers to have FICO scores in the 700 ranges to pass the loan application process.
Property Variety and Intent of Purchase
In the eyes of lenders, not all properties are created equally. Typically, condos are considered to be a bit riskier in the eyes of mortgage providers as it is not just the individual buying the home, but the overall financial health of a building that is under scrutiny. Luxury homebuyers needing a jumbo loan are going to have to prove the financial chops to pay of the debt. Permanent residency in a single family detached home is considered to be less risky than a similar home being used as a vacation property.
Lenders will evaluate each home loan application on a case-to-case basis and examine all three factors as part of the approval process. Right now consumers are in the unique position to score amazing bargains throughout the country. Mortgage Marvel can help you find the lowest mortgage rates available, in real time and without invading your privacy.
