Although lenders will offer suggestions regarding increasing your credit score and your loan to value ratios, when you don’t know where your need to be, how do you know when you get there? This is especially the case now when your destination keeps changing.
Capital Economics, an analytics firm, expects the housing crisis to end this year, according to a report released March 16, 2012. One of the reasons: loosening credit.
They note the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.
Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings. Along with this, banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.” In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.
While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.
We realize how specialized this information is and how it differs by lender and type of mortgage. Give us a call and we will share current conditions with you and assist you through the process. That is our expertise. We look forward to meeting you.