1. Harder to Qualify. Lending institutions are looking at credit scores with a magnifying glass. In the past 620 was good. NOW 680 is better and anything lower than 620 gets the potential borrower higher rates and higher fees. 740 gets you a terrific house but that is an optimum number that most people don’t have. This is called the FICO score named after the corporation that produces it (Fair Isaac Corporation). It is a statistical analysis of a person’s credit report.
2. Income and Assets Subject to Greater Scrutiny In the past, some loans were given without checking any of the financial figures of the borrower as long as he had a large down payment. This is no longer true. All the financial history of the borrower is examined at extreme lengths. Foreign buyers have additional problems since their statements are sent from a foreign institutions and have to be verified carefully here and that takes more time.
3. Appraisals Come In Low Since there are not as many sales to compare a home to, the appraiser has to branch out to like properties in similar close by developments and make adjustments. They are very careful to not include any personal property so as to skew the result. Their appraisal is usually counter checked by the lending institution and questioned. This procedure is also different in that the appraiser cannot speak to any realtor in his work and must rely on the cold facts.
4. Condo Mortgages More Difficult to Obtain In addition to qualifying the borrower, the lending institutions have to approve the condo that the borrower is buying in. Cash reserves have to be documented, owner occupancy rates are evaluated, deliquency rates on monthly maintenance charges are examined and if these facts don’t measure up to the standards set, then the loan is denied.
All scenarios make getting a loan, today, at these fantastic rates difficult. Statistically, it is quoted that only 3 out of 10 loans are made.
If you are thinking of buying, get qualified by a mortgage broker as soon as possible, before you start looking at properties. Let him know all your financial situations so when you find the perfect home, you will not be disappointed.