Well, according to all the news sources, that’s the perception of many and that’s because we’ve all been spoiled by the home mortgage rating relaxation since 2004. But we’re really back to basics.
The requirements for real estate mortgages are now back to where they were before 2003. Anyone applying for a loan had to meet the following criteria:
• Income (verified) that borrowers earned enough money to cover not only the mortgage, but also other expenses such as utilities, groceries, parenting, cars, insurance, etc.
• Declared income: are you kidding me? Bankers never trusted this data, verification was always required. Under the previous guidelines, a borrower could indicate the amount required to obtain the loan. As far as I know, state revenue is gone. If you can get a “reported income” home loan, be prepared to pay higher interest rates and provide larger down payments.
• 2 years tax returns and W2 to validate income
• Good credit
• Cash for down payment, prepayment and closing costs – again bank statements or other financial statements as proof.
• Front-end ratings had to be between 28-30%, back-end ratings 36-38% (and if everything else was great, we could sometimes get approvals with a back-end rating of 40%). %).
- front end ratio – amount of income to cover the mortgage payment and any escrow accounts – PITI – principal, interest, taxes, insurance, and homeowners owed.
- background ratio – amount of income needed to cover the mortgage and any recurring expenses such as credit cards, alimony, car payments. Make sure the borrower had enough money each month to pay for basic needs.
• Minimum 5% down payments, 20% to eliminate PMI (private mortgage insurance) required by lenders for less than 20% down.
100% financing and in some cases 105% financing never heard of the incredibly low interest rates we are still experiencing.
In short, we are now back to basics and this is good for all of us: sellers, buyers and bankers. There’s a difference between stretching your income a bit and buying a house beyond your means, especially with an adjustable-rate mortgage. We should all be thankful for the due diligence now required to purchase a home mortgage.
