Will You Be Able to Get a Home Mortgage?
One of the questions that some are thinking about right now is the following: Will I be able to get a home mortgage?
The answer, of course, depends on your individual circumstances, as it always has. The difference now, with the mortgage market in turmoil, is whether your individual circumstances will be acceptable to mortgage lenders. What might have been good enough last year, or even six months ago, may not be good enough now.
Consider: For a subprime loan, a credit score as low as 620 used to be acceptable to some mortgage lenders. Now, most mortgage lenders want you to have at least a 650, and some won’t consider you for a home mortgage unless you have a 680.
Another difference is in an acceptable debt-to-income ratio. For a traditional loan, it has always been necessary for many lenders that you have a 28/36 ratio. This means that only 28% of your gross income goes to housing, and your total debt load (housing plus other debts) is 36%. In some cases, a subprime loan would let that total debt load go as high as 45%. That is certainly not going to be the case again any time soon. So it means that you have to have lower debt to get a home mortgage now.
Finally, another part of the home mortgage loan application process that is changing thanks to the present debacle is documentation. Many a subprime loan was made with questionable documentation as to income, debts and other deciding factors. Now, documentation is required for just about everything, and it has to be good documentation. Even people with good credit and low debt are finding that the documentation requirements can be quite onerous.
But perhaps all this tightening isn’t so bad. It is forcing people looking to get a home mortgage now to carefully evaluate how much home they can afford, as well as whether they should be buying a home at this juncture at all. This means that people who buys home have a better chance of keeping them, rather than losing them to foreclosure.
Tags: get home mortgage, credit score, home mortgage loan, mortgage market,
second mortgage, mortgage lenders
