why is it so hard to get a mortgage
I read an article recently that argued itâs hard to get a mortgage these days. Just seeing the headline got me a little fired up. When it comes down to it, itâs not difficult to get a mortgage today, though people may think it is thanks to
news like. The post highlights the fact that recent mortgage default rates are nearly non-existent. But cherrypicking recent data probably doesnât give us a clear picture of what may happen in the future even if we maintain current mortgage underwriting standards. Apparently less than 1% of mortgages doled out since 2011 have defaulted. It just so happens that since that time home prices have nearly doubled in some areas, and have generally risen by half in many regions throughout the country. At the same time, meaning these borrowers have super low monthly mortgage payments and boatloads of home equity. Why then would they default? It would be unimaginable unless something completely unexpected happened, or a major hardship took place. The article also points out that nearly 70% of those with Fannie and Freddie mortgages originated since 2011 had. While that might tell us itâs time to open the credit box, it could also tell us that borrowers with lower credit scores are simply uninformed about whatâs out there. Indeed, there are scores of loan programs and lenders willing to offer mortgages to borrowers with much lower credit scores. Sure, it might be harder to land financing if your credit score is truly subprime (below 620), but there are plenty of options for those with marginal credit scores. In fact, the only require a 620 FICO score.
With that poor score, borrowers can get a home with just 3% down payment. They can also get such a mortgage with gift funds and to make their borrower contribution at or close to zero. Then thereâs the and its very liberal lending requirements. So to get this straight, basically no skin in the game and a poor credit score and youâre still approved for a mortgage. And at a time when mortgage rates are near the lowest on record. Heck, if you still canât qualify then it might not be prudent to further expand the credit box. It might just be that would-be borrowers with lower credit scores are fearful of what the housing market might bring after the most recent crisis and are simply staying on the fence. Or are lacking the confidence to take the plunge. Then there is the group that was foreclosed on or sold short, who are still unable to obtain financing until they become. Should we cut waiting periods so they can return earlier? Lack of Homes, Not Credit Availability Perhaps the data that says credit availability is low compared to pre-crisis levels is getting thrown off by todayâs very peculiar housing market. Could it just be that itâs difficult to find a home and not a mortgage? That if a potential buyer were able to successfully bid on a home theyâd be able to land the necessary financing? I wonder sometimes if thatâs skewing the data. Iâve said in the past that you may need a higher down payment than is necessary simply to outbid rival home buyers. The same might be true of FICO scores. Perhaps your offer wonât look as good if youâve got OK credit compared to another buyer with a 720+ score.
So it could simply be competition in the housing market that is making it look as if lower-quality borrowers are being squeezed by lenders, when it fact they too could and would be approved for a mortgage if given the chance. I really donât know what lenders could possibly do to open things up further. And my fear is that making it any easier might burn these very loan recipients in the future. Bubbles are and if mortgage financing goes down the wrong path again, those who are able to finally buy (supposedly) thanks to looser underwriting guidelines may be the first ones to lose. ortgages were then being sold at as low as 0. 09 of a percentage point above Bank Rate for the life of the loan. Someone who took up this loan would now be paying just 0. 34pc on their mortgage. The Dasturs pay 0. 49 points above Bank Rate. ÁThese lenders will be losing money hand over fist,Á said Mr Collins. ÁWeÁve seen a number that would dearly love to get people off these very low trackers. Á Mr DasturÁs mortgage broker, Martin Gaskell of Gaskells IMA, said he had seen this happen to many of his other clients. He said it was a Áconstant battleÁ against lenders, which did not use common sense to make lending decisions. ÁLenders are being too harsh at the moment and not taking a realistic view,Á he said. ÁTheyÁre working from a Ácomputer says yes or noÁ attitude rather than working off an individualÁs situation. ItÁs too strict and getting worse all the time.
Á In the wake of the financial crisis, increasing regulation has limited lendersÁ ability to make some loans. For example, they their earnings or more. Mr Gaskell said Santander was by no means the worst offender and praised the work of the bankÁs business development manager, who he said had been helpful to the coupleÁs case. But he said Á Á they can take a more sensible view of thingsÁ. ÁSome of the banks are worse than others. HSBC has great rates but wonÁt lend to anyone. Nationwide can also be difficult to deal with. Á The Dasturs have found a buyer for their house, which means they can put more equity into the new property and take a smaller mortgage, a proposal the lender has approved. A spokesman for Santander indicated that the car loan had been behind the DastursÁ problems. The lender also said it supported ÁportingÁ applications from customers who wanted to borrow the same amount or less. He said: ÁWhen reviewing Mr DasturÁs affordability, unsecured debt was highlighted, which had not been initially declared. ÁWe have taken the additional information now provided by the customer into account and have offered him a loan of áå464,000. Á Have you been unexpectedlyá rejected for a mortgage? Let us know: olivia. rudgard@telegraph. co. uk For fee-free advice on your next move, Telegraph Mortgage AdviceÁs experts can provide guidance on your next mortgage. Call today on 0800 073 2322 orá á for more information Have a question for our experts? Email moneyexpert@telegraph. co. uk. The best of the answers are included in our
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