Home Mortgage Lenders Are Getting Lenient with Home Loans

2015 is almost coming to an end. With the New Year, everybody is hoping for something new as well. Would this be a good time to purchase a property? There have been reports saying that home mortgage lenders are easing up with home loans. This might be a good time to invest into a property or own your home. 

Let us take a closer look if this is something that could benefit us especially to those who are looking or planning to buy a new home for the next year.

Credit Standards

One factor why some people are unable to purchase is because of their credit rating. More lenders are expected to ease up with their credit standards; this is according to government-sponsored Fannie Mae. This will enable more people to get a mortgage easily. This could also enable affordability in the housing market. Housing market has been suffering due to tight credit and supply of homes for sale.

According to survey, the share of lenders who expect to ease standards for government backed loans increased to 16 percent. While the share expecting to tighten fell to 2 percent. This is not only for standard or fixed rate loans but this is across all types of loan products.

This is why it is considered that it is an excellent time to refinance or buy a new home. If you have been turned down for a loan in the past, consider resubmitting your application as your loan may get approved today.

Interest Rates

The potential when it comes to increase in interest rates, which would narrow the number of customers for loans, may increase competition among lenders and force them to ease some of the extra requirements or safeguards they added after being sued by the government for billions of dollars over bad loans dating back to the last housing boom.

This has also led the big 3 Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA) to encourage lenders to ease up and they have been clarifying lender liabilities for bad loans.

New Scoring Model

A new scoring model may also help benefit borrowers. Fannie Mae recently announced that they will start using a trended data when looking at mortgage applicants. Compared to previous way of analyzing the borrower’s credit history, this will enable to have a wider look at their data and help boost some scores. Using the trended data, the percentage of borrowers in the high risk tier would increase from 12 percent to 21 percent. These consumers generally have the greatest access to new loans at the lowest pricing.

The question is when it comes to buyer’s preference would they actually think of this as a good time to purchase? A survey has been laid out by Berkshire Hathaway HomeServices which was conducted among 2,500 homeowners and potential buyers. According to the survey, they found 67 percent of potential home buyers thought that the current mortgage rates are either average or high. But when looking at the data, today’s rates are actually very close to record lows.

Is this a great time to buy or purchase with home mortgage lenders are getting lenient with home loans? Perhaps it is beneficial especially to those who have been declined with their application previously.

If you are planning to buy a home today, reach out to a real estate professional to help you with any questions that you have regarding investing or buying. They will also help you by explaining from choosing the property to closing of the sale.

 Source: http://www.cnbc.com/2015/12/18/home-mortgage-lenders-easing-up-on-home-loans.html?sf17491318=1