HOUSING CRISIS TO END IN 2012

HOUSING CRISIS TO END IN 2012

D.S.News.com reports that Capital Economics experts predict that the housing crisis will end this year.  The primary reason is that banks are loosening credit standards. You no longer have to be Donald Trump to buy a basic home!

Five years ago buyers could qualify for a loan when their FICO credit score was in the mid to low 500s. (Fair Isacc Corporation developed a formula to apply to an individuals credit history which predicts the likelihood of a that borrower being 90 days late on their mortgage payment. The scores range from 300 to 850) The factors considered are: 1) payment history, 2) credit history length, 3) Recent searches of their credit record, 4) Other factors, such as types of credit used, recent improvements or declines, court or tax liens…)  It now takes a FICO score of 700 to qualify for a mortgage loan.

During the housing spike, one could obtain a loan for 100% of the purchase price.  In the past year, few borrowers could get a loan for more than 75% of that purchase price.  Lenders have recently loosened that requirement and most are back to a loan of 80% of the purchase price if other factors pass muster.

Lenders are also now lending amounts of up to 3.5 times a borrower’s annual income, up from 3.2 times in recent years.

The days of 100% financing and “liars loans” are long gone.  Borrowers still have to meet stringent standards to qualify for financing.  The good news is that lenders are loosening up on most of those standards a little bit at a time.

The lenders are being very cautious, however, they have new loans to stay in business, so the market is slowly righting itself.

Select this link for the full DS News story:

http://www.linkedin.com/news?actionBar=&articleID=5567733516482908167&ids=dj8QdP4Ud3gQdzsRe34OejoRdiMRcPkVdjgUdzgUczkRdPsUdzkRb3sOdj8RdjAPcz0UcPcVdPASdjkIczsQejcRcj4Oej8TdPwQdPoRdiMTdz4Uc3AOe3gScjkPcPsTdzkR&aag=true&freq=weekly&trk=eml-tod2-b-ttl-0&ut=1jY48NKE9SMB41

If you have questions about obtaining a loan, feel free to call or text (916) 337-0658 or e-mail Mike@BuyYourVilla.com .