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Mortgage - Mortgage Lenders Tighten Lending Guidelines Mortgage lenders over the past several months have began to tight lending guidelines across the board. In the purchase market place for sub prime borrowers with 580 credit scores it was easy to qualify for 100% financing. Most sub prime lenders today have raised there minimal requirement to 600 credit score or better, depending on the documentation type. Stated loans including 100% investor’s loans have additionally seen a particular increase in required qualifying credit scores. There have additionally been mortgage lenders in the sub prime market either close there doors or be put up for sale. To name a few, Ownit Mortgage including Sebring closed there doors while other mortgage lenders such as Option 1 which is owed by H&R Block was put up for sale. Account Executives for sub prime including Alt-A (typically credit scores between 580 including 620) companies have experienced there sale volume being cut in half from what it was 6 months ago. These changes including the decline in recent months in home sales including new home start ups has additionally hurt the mortgage brokerage businesses. The good news is as in a particular industry that has experienced as much growth as the housing industry has is the simple fact that there could be leveling off of home appreciation including the industry as a whole could obtain leaner with better loans being written including approved. the is good for the economy long term because it means stability in the housing market place. Mortgage lenders might not afford to have portfolios with loans that are not performing due to relaxed guidelines in a booming market. There are still plenty of good programs being offered for first time home buyers including people with credit challenges. As a mortgage broker it simply means that we must be more prudent with our borrowers. Education with regard to credit is paramount at the time working with first time home buyers including seasoned borrower that have credit issues. Preparing a borrower whether they are buying or refinancing there homes is additionally paramount. Borrower are not aware pertaining to the recent changes that have been made in the industry including it is our job to obtain the word out - if you are going to make a change in the type of loan they have or if they plan of buying a new home obtain started early so that all issues might be addressed up front including they might be positioned properly at the time the time comes to do there financing. Getting to the borrower ahead of time has always been the issue. Most borrowers, only because most don't know any better wait until the last minute including then try to handle there financing . Any issues that arise at the last minute, leaves them open for not always the best long term loan situation. The housing market place is changing. Reports seem to indicate that for most area in the country homes prices have adjusted including could start leveling off while interest rates are still very favorable including should stay that way thru 2007 including into 2008. There are certain pockets of area in the country that have been affect greater than other in terms of depreciated property values but seems to be isolated. The bottom line is there are plenty of good loan programs out there for all types of borrowers. It may require a little more work by your mortgage broker to properly prepare including educate the borrower, but that is a good thing long term. a particular educated borrower is always better for the economy long term.
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