Home Loans and Today’s Market

Home Loans

With the world economy firmly entrenched in a reset mode, loans of all types are becoming more difficult to obtain. That is not to say that it is impossible. The fact of the matter is, financial institutions, banks, and credit unions will always make loans. It is the lifeblood of the financial industry.

The business part

With a record number of foreclosures, the inventory of available homes is large. That makes the market very saturated with homes that are in the hands of the home buyers. Therefore, banks will need to make home loans. The process for securing home loans may indeed be more difficult, but home loans are still very much available. Potential home buyers have many choices on where to secure home loans.

Changes made, documents are now a priority

One of the first differences home buyers will notice when trying to secure a new home loan is that the need for accurate documentation is now a priority. In the past, consumers could literally loan with no down payment, no documentation to prove income, and a substandard credit score. Essentially, with a signature a home buyer could secure a new home loan.

Today’s requirements

Those days are past. Today, lenders are requiring borrowers to provide accurate documentation to support a new home loan. That means being prepared as you begin your search for new lender.

More documents are needed

Gather all your financial statements and documents. Make sure that you pull a recent credit report on yourself. If you have pristine credit, securing a new home loan will not be an issue. However, if your credit score is below 650, it’s likely you will have to provide documentation to answer why your credit score is lower. This does not preclude you from a new loan, it just means providing more documentation.

This may mean having to provide explanation letters to prospective lenders about why your credit score or credit report shows a negative. Provided that you have overcome the issues that produced a negative score, and can provide documentation to that effect, lenders may be willing to provide a home loan for you.

The competition between lenders

It’s likely that you are bombarded with lenders advertisements trying to entice you into using their company. This can work to your advantage. Here is how. Make sure that any lender you communicate with understands that you are shopping on your own among several lenders. There is nothing like the thought of competition for a prospective lender to work harder for you. This may result in a lower interest rate, or other financial benefits. The point is to shop one lender against the other for your benefit. Lenders need borrowers as much as borrowers need lenders.

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