Posted by John Martin on Tue, Dec 01, 2009 @ 09:43 AM
The mortgage lending guidelines will tighten once again on December 12, 2009 making it more difficult for some borrowers to obtain a purchase loan or refinance their existing mortgage.
Fannie Mae announced it will limit the maximum debt-to-income ratio to 45% of a borrower's gross income. Previously, a borrower could qualify up to 50-55% debt ratios. Fannie Mae did mention that they will consider debt-ratios up to 50% assuming the borrower can provide "strong compensating factors". This would include high credit scores, low loan-to-values (LTV's) and/or significant cash reserves.
In addition to debt ratios, Fannie Mae will also require a minimum credit score of 620, previously the minimum was 580. Fannie Mae believes raising the minimum credit scores and tightening the debt ratios will support prudent risk management and better ensure sustainable homeownership. One can argue that this is an effort to crackdown on the loose lending standards that led to the mortgage crisis that started in 2008. Industry professionals are concerned the new requirements may offset the initiatives introduced by the government to provide more liquidity in the secondary lending market.
Current mortgage rates are at an all-time low right now, so act now and avoid these stringent guidelines. Please call a HomeQuest Mortgage representative for more details at 866-839-1117.
Posted by Jason Evans on Thu, Nov 13, 2008 @ 02:05 PM
Everyday we get calls from worried borrowers asking how difficult it is to get financing given the state of the economy and the lending environment. Many borrowers are hearing from the media that you need to have excellent credit and a 20% down payment in order to get qualified for a loan now. This is simply not true. While it is true that lending guidelines are tighter than they have been the past few years these statements are an exaggeration of the requirements for getting a mortgage.
If you are purchasing a primary residence or a vacation home you can still make as little as a 5% down payment and get the lowest fixed rates available on the market. In some cases only a 3% down payment is required, even with today's more strict guidelines.
One area that has been cut back on is income documentation. In the past borrowers could get a loan without proving to the underwriter how much money they earn or even if they had a job at all. Now almost every loan program calls for income documentation through personal tax returns for self employed borrowers or a paystub and last years W2 for borrowers who are not self employed.
For credit scores lenders want to see your mid FICO score at 620 or higher. If you want the best rates on the market your score will have to be at least 740 in most scenarios.
The main point is that while mortgages are not as easy to get today as they were last year, financing is still available and banks still have money to lend. If you have any questions or would like one of our loan officers to review your individual scenario just give us a call!