Home Loan Approvals Getting Easier

The credit crunch led to a tightening mortgage-lending world in the past three years.

It’s over.  We’ve said it before on this blog:  the credit crunch is over IF you and your property represent a good credit risk.

According to the Federal Reserve’s most recent survey of senior bank loan officers, approximately 10% of lenders added mortgage qualification hurdles between April and June.  That’s down from when nearly 80% were tightening guidelines just two years ago.

It looks like many mortgage guidelines, especially those that pertain to Chicago home mortgages, have reached their most restrictive levels.  There are still some marginal changes that represent that 10% of banks tightening.  A few have increased their minimum FICO score on FHA loans, for example.

I personally watch the private mortgage insurance (PMI) companies.  On mortgage transactions, they have the most exposure since they are insuring these 85, 90, and 95% loans.  A few years ago, they significantly tightened their guidelines in:  Arizona/Florida/Nevada, on condominiums, and FICO.

Doesn’t that sound sort of like where the majority of the foreclosures were?

In the past few months, we’ve been seeing their guidelines not only holding steady, but relaxing.  Notably, some PMI are back in some parts of those “declining markets,” they’re removing condominium restrictions, and they are heavily discounting rates for exceptional credit scores.

Home loan approvals are getting easier.  The one common thread coming out of the credit crunch is FICO.  Strong FICO=strong loan options.  Anything else may mean no loan options.  If you haven’t checked your own free credit report, ignore the TV ads, use the free report at http://www.annualcreditreport.com