Mortgage lenders and the laws governing their practices have changed drastically in the last couple of years, and for good reason. Their excesses and shoddy practices, if not illegal dealings, are well known now to the home buying public. One of the end results is that mortgages are not as easy to obtain as they were at the peak of the housing bubble. Today, banks are making sure they don’t make the same mistakes, so loan underwriting standards have become more stringent than ever before.
According to a recent Federal Reserve study, it was found that about 75% of the banks surveyed indicated they had tightened their lending standards for prime, subprime and commercial mortgages. That was up from about 60% in the previous survey. With this sharp increase in lending standards, borrowers are being turned down for real estate loans at increasing rates.
As reported by RisMedia.com, here are the top 7 reasons banks are denying home loan requests.
1. Poor credit - even with a large down payment, and even the FHA requires at least a credit score now of 693, higher than the national average.
2. Insufficient liquidity - 20-30% down payment required for most banks.
3. Lack of income - with proof for the last 2-5 years of income, regardless of credit score or down payment.
4. Lying on the application.
5. Debt - must not be excessive and debt-to-income ratios must meet stricter guidelines.
6. Unemployment - borrower must show at least 2 years of stable work history.
7. Self-employment - makes it much harder now to be approved.
Home buyers across the country are realizing quickly that reputable credit and stable income aren’t always enough in qualifying for a loan through a traditional bank. If you want to purchase a home in Hamilton, or other communities in Mercer and surrounding counties, contact me for referrals to reputable and experienced local lenders. Let's work together to find a way for you to purchase a New Jersey home.
Joe Giancarli, SA
Real Estate Advisor
Short Sale Specialist
609-658-2612
jgiancarli@remax.net
http://www.joegiancarli.com/
http://www.njhomesource.com/
http://www.newjerseynewhomes.blogspot.com/
www.activerain.com/blogs/josephgiancarli
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