Myths about obtaining a mortgage during the "credit crunch"
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!