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Used to be that when someone wanted to buy a home, they spoke with lender, found out what they could buy, got a pre-approval letter, and then made an offer as a qualified buyer. Today that has changed. This doesn’t mean that they can’t qualify at all. It’s is just that the criteria has changed.
Thirty year veterans of lending are now saying, "It changes every single day and several times a day." How does a client go about making an offer that they can be sure they can afford? Write a financing contingency into everything and don’t make it a short one. Sellers understand that lending criteria has changed and they are willing to work with buyers to help them buy the home.
While lenders have these strict rules, you can prepare yourself to qualify with the following:1) 20% down payment
2) Six months to one year reserves, not in stocks
3) Great credit scores
4) Provable gross income, typically 33% of which will be for a loan
An example for a $750,000 purchase price would mean:
1) 150,000 down payment
2) $25,484 to $50,968 was left in a bank (6 – 12 months reserves)
3) Credit scores above 730
4) $4,247 for monthly payments
5) Gross monthly income would be $12,741 or more
As mortgage backed loans begin to be traded more on Wall Street, we should be able to see lenders easing their requirements for pre-approval.
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