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Good read on changes in lending standards


If you’re one of the few who are actually looking to buy a house, and are wondering how amid all the turmoil credit standards are changing, real-estate columnist Kenneth Harney has a informative article in The Washington Post detailing the general changes. To qualify for a conforming loan, many lenders previously required a “FICO score” of only 620. (What’s a FICO score? Click here for an explanation.) No more. Now they’re demanding a FICO score of 680, or even 700. If your FICO score is below those higher numbers, then you have to get a “subprime” mortgage and…well, good luck getting one of those because most institutional investors won’t touch a subprime loan these days.

Among the other new demands Harney is seeing from lenders:

More savings. "Rather than a minimum of two months' worth of loan payments verified as on deposit in a bank, some lenders now want to see six months' worth for certain loan categories."

More current "comps" One lender "wants only the freshest 'comparables' for appraisals backing loan requests -- properties sold within the past three to six months, plus detailed information on asking prices of similar houses for sale."

More documentation. Have trouble documenting the full income you're claiming? Better have a FICO score of 720 or higher to get a "lo doc" loan.


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