It seems that the banks have stopped increasing loan guidelines and perhaps even starting to ease them. Many professionals in the mortgage industry have long believed the guidelines were like a swinging pendulum that was way too easy on borrowers during the boom and then got way to difficult during the crash. Now we are starting to see signs of it moving more towards the middle.
The majority of the big banks reported that they had stopped tightening the mortgage guidelines since the last quarter. The few remaining banks continued to tighten the guidelines slightly. One big change is the ability to get a VA Home Loan refinanced according to the VA guidelines and not the bank guidelines. With a VA Loan you are able to refinance with much lower credit scores and property values are not an issue.
There were just as many big banks easing loan guidelines as there were that tightened them and the majority of them remain unchanged. This is the signs that say the tightening of guidelines has likely hit its limit. Now may be the best time to reach out to your loan officer to inquire further.
The easing of mortgage guidelines as a whole would likely spur much more activity especially with rates extremely low and the home prices continuing to come down. Home affordability is at an all-time high so there could be a nice spike in mortgage volume in the upcoming months.
Today, underwriters are more conservative with respect to household income, total assets and overall credit scores. Even as compared to just 6 months ago:
- Minimum credit requirements are tighter
- Down payment/equity requirements are increased
- Maximum allowable debt-to-income ratios are lower
If you have any questions about a possible mortgage move for yourself then you should simply reach out to a loan officer and get your specific scenario addressed. Low rates and low prices have combined for a great opportunity especially considering how much rent prices have been increasing lately.