You heard it before…. Home prices are at their lowest since 2001, mortgage rates are low and this is the best time to be a BUYER! All this is true but there is a catch 22, it really don’t matter how low rates are if you can’t get a loan. . The fact remains that about a quarter of people who apply for loans are TURNED DOWN according to the Federal Reserve.
The days of getting a loan fairly easy is most definitely over, even good borrowers with just a couple of blemishes on their credit are being denied loans according to chief economist for the National Association of Realtors. Tougher credit standards have stripped the buyers market as much as 30% with potential buyers not even applying for loans anymore because they assume they will be denied.
Credit scores requirements have risen from 720 being average to now 760 for conventional loans that are backed by Fannie and Freddie. The average credit score for FHA backed loans have risen from 660 being average to now 700 being the average credit requirement. Those borrowers with credit scores in the sub-620’s will find that loans are almost nonexistent for them.
The difficulty of getting a loan in today’s market just don’t stop at credit, as a lot of lenders are requiring 15 to 20% down payment on home purchases, which is a far cry from the days of almost 5 to 0% down. And it it’s about to get even harder for buyers, The new 20% Down Payment Law that was proposed buy Federal Regulators is due to be voted on by September of 2011.
The law would require banks to keep 5% of some of the loans on their books, specifically loans with less than 20% down instead of selling them off as securities in the stock market. The result will be that banks will be unlikely to issue loans with less than 20% down. First-time buyers will find it harder to come up with such a big down payment which will further drive down the demand in the housing market.
Well here is some what good news, If this new law gets passed, Fannie, Freddie and FHA loans will be exempt from the requirements and they represent more then 90% of the market right now. The government however wants to reduce the presence of the three agencies in favor of private lenders, so maybe that is not so good news after all!
So what should you do if you want to buy? First thing first know that knowledge is power and knowing about the market that we are in right now will start you on the process of discovering other options to your homeownership dreams. Where there is a will there is a way!!
Speak your Reality Realty About This In The Comment Section!
GOT A TIP? Email it at realityrealty@live.com
By Mon Sherie, Contributor
You heard it before…. Home prices are at their lowest since 2001, mortgage rates are low and this is the best time to be a BUYER! All this is true but there is a catch 22, it really don’t matter how low rates are if you can’t get a loan. . The fact remains that about a quarter of people who apply for loans are TURNED DOWN according to the Federal Reserve.
I believe this agent probably received many calls based on his ingenious use of his name! 
By Mon Sherie, Contributor
By Mon Sherie, Contributor
If you have had the opportunity of finding a place to rent in today’s market then you are well aware of how crazy and expensive the rental market has become. Rental prices are high due to homeownership dwindling and that wonderful effect of supply and demand. Not only is the rent peculiarly high so are some of the requirements to get into rentals. Some landlords are not only asking for 1st and last months rent but also 1 and 2 months of security deposits as well! This can lead to many renters having to shell out thousand of dollars (in some cases almost the equivalent of a down payment for a home) just to RENT!!
