If you are considering purchasing a new home some time in the near future, know that banks are changing their lending practices. All over the news and media current homeowners and future homeowners have learned the terms "mortgage meltdown" and "lending crunch" used to describe the current lending situation in America. This "crunch" began when borrowers began to default on high risk mortgage loans. In many cases borrowers eager to get qualified for home loans, signed on to loan terms without fully understanding them. These borrowers saw their mortgage payments increase over time, and were unable to keep up with monthly payments. As a result, several properties went into foreclosure, and these borrowers further damaged their credit.
These days, some of the nations largest mortgage lenders, due to numerous financial loses, are much less willing to make risky home loans. In some cases, regardless of credit rating, these banks want to avoid mortage lending altogether. So what does that mean for house hunters? It simply means that you or your mortgage broker will have to work more dilligently to secure financing. To make the process easier, it is recommended that potential buyers do take the following steps:
Monitor your debt and credit score. Lenders will want to pull credit from all three credit bureaus. Give yourself at least 6-12 months of timely payments on any existing debts. Also make attempts to reduce your debt to income ratio as much as possible.
Understand the housing and job market. Lenders want to lend to borrowers with stable employment. They also want borrowers to purchase homes in housing markets that are stable and likely to increase in value.
Save, save, save. A borrower that brings more to the table is more likely to get financing and better rates.
As a potential homebuyer, you will have to do your "homework" - literally. It is a buyers market, but only for those who can show themselves as less of a risk. If you are a buyer with less than perfect credit, fear not. At Butler Financial Group, Inc., we have access to several mortgage lending products and programs that may assist you. Feel free to contact us, and get closer to your dream of home ownership.
