Monday, March 12, 2012

Lending Restrictions Loosen

For those of you who have purchased a house in the last four years you are  familiar with the lending constraints that home buyers face today.  The process can seem downright invasive with lots of  CYA’s from the lenders. The current regulations are, in my opinion, a government overreaction to the seemingly on-existent lending guidelines from the last housing boom, built on risky credit and under collateralized loans.

Thankfully the pendulum may be starting to swing back to some semblance of reasonableness.  Finally, after several years of tightening lender requirements things are starting to stabilize.

The average credit score required for a mortgager has stabilized at 700.  This is higher than prior to the crash but  has stopped constricting.  Also, banks are now lending p to 3.5 times the borrowers earnings.  This is up from a low of 3.2 times borrowers earnings.  Finally the loan-to-value ratio (the amount of a mortgage as a percentage of the total appraised value of the property)  was as low as 74% LTV in the mid-2010’s, is not at 82% LTV.

Unfortunately, these gains will probably not be enough  to mean home values appreciation but it will make buying, one of the great values available in today’s market easier.

In my opinion, if you haven’t already taken advantage of the incredible values & interest rates available, now is the time.  Remember, you can’t time the market, only hind-site will tell us when the market  has  bottomed!

Terry Roberts
Owner, Broker
RE/MAX Landmark