Requirements for Mortgage Loan Approval are Easing
Anyone who has bought or sold a home, or considered either, since 2008 knows that there were drastic changes made to the requirements for mortgage loan approval. The rules were tightened to assist in preventing another housing-bubble scenario, but many applicants have found those changes to present a real, and hard to overcome, hurdle to home ownership.
Stabilizing in the housing market has been reported for some time now, and as we enter the heart of housing sales and buying time, good news for prospective home buyers is that mortgage requirements have begun to ease.
Two Factors that could deter a Home Purchase Have Changed
What exactly has changed? For anyone looking to buy a home this spring, there are two criteria that have loosened their guidelines to make it easier for you to qualify for a mortgage loan.
FICO Score – the score required to qualify for a mortgage loan has been falling over the last 5 months.
Decreased Down Payment: the percentage of the sale price needed to secure your mortgage loan.
What does this mean to potential home buyers?
By relaxing the rules around FICO scores and down payment requirements, potential home buyers have an improved opportunity to qualify for the home of their dreams. Looking to buy a home this year? Now is a great time to familiarize yourself with your credit score and the details in your credit report to ensure all the information reported is accurate. Once you have your credit score in check, talk with a local mortgage lender to find out the down payment requirements to buy a home in your area. Armed with this information, you are ready to enter the home buying process.
However, Housing Inventory is Still Low
Despite easements in loan requirements, it’s important to keep in mind that housing inventory is still at historic lows, which means competition is increased for anyone looking to buy. Be specific about the things you need in your home, and those criteria that you can pass on, to allow your real estate partner the best search criteria to find your perfect home as quickly as possible. For example, you need three bedrooms but can accept a home with 1 ½ baths. Or you need a large kitchen, but don’t mind smaller sleeping spaces. Knowing what you want in your next home will help your realtor find the best options quickly. With the decreased FICO and down payment requirements, you will be well on your way to owning your next home!
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