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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