Qualifying for a mortgage has changed significantly over the years.
After the financial crisis, mortgage lenders tightened their belts on approving home loans. That said, there are now government-backed programs for first-time home buyers with subprime credit scores to get mortgage insured via the Federal Housing Administration. And, these buyers are able to put down as little as 3.5 percent of the home’s purchase price. This is in stark contrast to the popular belief that the home’s down payment needs to equal at least 20 percent of the purchase price.
When considering your loan application, lenders will look at your credit scores, loan-to-value ratios, income, debt load and many factors. They will also ask a multitude of questions about your financial portfolio in effort to get loan approval.
Due to this, potential home buyers have been reluctant to try to buy a home, for fear of being rejected. As a result, some banks have responded by lowering the minimum credit scores, or FICO scores, for loans that are backed by the government, the Federal Housing Administration, Fannie Mae or Freddie Mac.
If you’ve been thinking of buying a home and aren’t sure if it’s “the right time,” contact your Realtor and discuss the pre-approval process. And, when the time is right, we welcome you to contact us. We have been in the business for 125 years…providing title insurance, escrow and closing needs to clients. We work hard to close your home purchase quickly and efficiently, with the utmost attention to detail.
Contact us with any questions! We look forward to working with you!