Lenders altering rules for credit

The article, Lenders altering rules for credit, from the Arizona Republic, reports that banks and lenders are rapidly changing their requirements for loans as home sales and prices fall and delinquencies and defaults rise. To adjust their standards, which many critics say grew too lax in the middle of the decade, lenders now are raising minimum credit scores, offering smaller loans and requiring detailed proof of income and assets.
For those who do meet the tightened criteria, a new plan announced Tuesday by the Federal Reserve to provide $200 billion to the financial-services sector should mean there is plenty of money available for borrowers and lower interest rates, said David Wyss, chief economist at Standard & Poor's. In early 2007, customers with credit scores in the low 600s would be able to receive a mortgage with no down payment and by simply stating their income. Today, a credit score below 680 is a red flag that subjects a prospective homeowner to higher rates and special fees.  Read the entire article to find out more.

Older Homeowners Cautioned On Use of Reverse Mortgages

The Financial Industry Regulatory Authority urged homeowners over the age of 60 to carefully weigh their options before tapping into their home equity through reverse mortgages to obtain additional income for their retirement years.

The group, formed by a merger of the NASD and some regulatory functions of New York Stock Exchange parent NYSE Group Inc., warned that a reverse mortgage -- an interest-bearing loan secured by the equity in a home -- can jeopardize their financial futures.

With a reverse mortgage, a bank makes payments to a homeowner instead of the homeowner making payments to a bank. The loan is repaid, with interest, when the borrower sells the house, moves out or dies. Reverse mortgages have high fees -- typically about 7% of the home's value -- and they make it difficult for homeowners to leave the property to their heirs.

Read the whole article at realestatejournal.com.

 

A Good Time to Buy a House If You Can Afford One

For years rapidly rising prices kept many first-time home buyers out of the housing market. But as home values slide further downward and interest rates hover at relatively low levels, it may be time to start looking to buy that first house.

That is, if you have a secure job, can afford higher down payments than were required a few years ago and can meet lenders' much stricter income and credit requirements.

Also, don't assume the seller is even in the right ballpark with his asking price. Most real-estate agents and sellers only look at comparable sales prices, or "comps," of similar homes in similar neighborhoods. Take a lesson from property investors and appraisers instead and check out prices from other angles as well.

 

To read the whole article go here