Getting A Home Mortgage Today - Never "In The Bag!"
TODAY, 10% DOWN - EVEN WITH A GOOD CREDIT SCORE - SOMETIMES WON'T CUT IT!
A first-time home buyer! Dual-income household! No car payments! 719 FICO Credit Score! Stable, City of Chicago Employment!
Back in the 1940's, a movie star like Jimmy Stewart or Virginia Mayo might have said of this kind of homebuyer's ability to close on a mortgage loan as "In The Bag!"
Two or three years ago - a "Slam Dunk!"
But, today, not anymore!
Our Chicago Real Estate Team received a 4:30PM telephone call from one buyer's lender that Freddie Mac had refused to approve a 90% LTV loan for such a couple. They demanded a minimum of 20% down - total back-end ratio just over the limit.
This last-minute denial - less than one business day before their sale is due to close - this Monday, at noon!
The buyers can close, however - if they came to the table with another 10% down - in dollars, another $25,000! But who has that extra dough, at the very last minute, right before closing, just laying around?
FHA, according to the Independent Loan Originator working for the buyer, would be the only possible alternative here! No-Doc Financing? Sub-Prime? Piggyback Loan? All no more!
So, on to an FHA-Guaranteed Loan, for 3.5% down - plus hefty MIP, blended into the mortgage, and into the monthly payment. A new FHA appraisal - with its possible repair and re-inspect checklist.
And a minimum of a week or two delay in the closing, much to the distress of the buyer, the seller, and at least two more buyers and sellers in a chained, contingent series of transactions.
These days, according to Ilyce R. Glink in today's Chicago Tribune, a 700 FICO Credit Score doesn't provide the automatic loan approval it once did. Nowadays, home buyers have to score at least a 720 FICO for the best mortgage rates. Your back-end debt-to-income ratio - not a dime over 36%, even for a more-forgiving FHA loan.
And buyers of condominiums, or townhouse condominiums, usually pay a steeper rate these days, with higher fees, and the requirement for a larger down payment.
This all begs the question, "When will the Real Estate Market, in Chicago, and elsewhere, begin to truly turn around?"
Of course, outstanding inventory of homes for sale plays a big part. As does Consumer Confidence. And the Employment Outlook, locally and across IL.
But so will the way home loans are underwritten for borrowers!
The "Old Days" of EVERYBODY gets qualified are likely long gone! But what about the poor folks caught in the middle? It is their likelihood to qualify for home financing that is an integral part of any possible housing market turnaround!
Stay tuned for further developments!
And, please, pray for this one buyer of our Team's listing to find a way to qualify - so our Listing Client can move on, and so can the family they are buying from , and their sellers, and so on, and so on . . .
DEAN MOSS & DEAN'S TEAM CHICAGO
