As we get more information regarding the new HARP guidelines with easier rules, we are also seeing tougher underwriting for most mortgage programs!
We are still waiting for most of the banks to determine how they are going to apply the new Fannie/Freddie refinance guidelines but we know the basics. Unfortuantely until the banks issue their guidelines, none of us really know what we will be able to do!
As far as other mortgage changes, if you have applied for a mortgage in the last twelve months, you have seen tighter guidelines again. The higher delinquincy rates and defaults since 2007 have caused banks to re-think their standards. Most mortgage lenders are going over mortgage files with very strict rules to make sure nothing slips by!
The main changes we have seen are:
- Minimum credit scores have risen in the last year or so
- Down payment/equity requirements are higher
- Minimum debt to income ratios are lower than they used to be
Mortgage rates are extremely low, but qualifying for the new mortgage may not be as easy as it used to be! The best advice I can give someone that is looking to buy a home or refinance is to have patience. Underwriters are under more scrutiny than ever before and they are looking through the files closer than ever before. Things that may not have mattered in the past may be very important now. Appraisals are looked at very closely - more than ever before.
Make sure you keep documentation on everything that could be needed. You will need recent paystubs, bank statements, tax returns and w-2's. If you are selling something for the down payment, you will need to get a receipt and also have proof of the value (blue book information for cars, etc). If you have lots of deposits in your bank account, you will need to explain the deposits and show proof of what they are. If you have credit inquiries on your credit report, you will need to explain what they are from. If you have opened up new accounts that are not listed on your credit report, you will need to show what the balance is and the new payments.
With documentation, your approval will be much easier. If you question something, ask your loan officer. If you aren't sure of something or are thinking about buying something (car, furniture, etc) make sure you tell your loan officer!! With the requirements to verify employment and credit within 24-48 hours before closing, it is more important than ever, to keep your loan officer informed of any new purchases, etc.
We know someday mortgage guidelines may relax, but we don't know when! For now, know that we are here to help you with your home purchase or refinance. If you don't understand why you are being asked for some information, ask your loan officer, they are there to help you!
Leslie Vanderwerf, NMLS ID#335509, Summit Mortgage - Email - Website
