LoanCentral's Real Estate Lending Blog

Many mortgage lenders are tightening thier underwriting standards which can make it much more difficult for potential borrowers to get approval for loans.

The new standards fall into the following areas, according to Wells Fargo & Co. and other large lenders:

• Ability to repay. Buyers are no longer being qualified at the low initial rate. They must qualify for the loan payments at rates equal to what the loan would be if it reset at a higher rate.

• Down payment. Lenders want buyers to put some money down, even as little as 5 percent or 10 percent. Loans for 100 percent of the price are very hard to get. LoanCentral still has some 100% financing options available but many of our investors have stopped offering this program. 

• Credit score. Credit scores range from the high 300s to the low 800s. Borrowers with a credit score above 680 are likely to qualify for a reasonable deal. Between 660 and 680, they may qualify, but the deal could be pricey. Potential borrowers with a score of 620 or less need to raise their scores before they can qualify.

• Income and income verification. Producing proof that a borrower has a job is key; “stated income” loans are much more difficult to get. Also lenders are unlikely to approve a loan in which the home buyer will spend more than 45 percent of his gross income paying off debt, including paying the mortgage.

13.2% Jump in the sales of new single-family homes... Wow, whats the real story - is it that good? Take a look at the new homes sales price. This is a clear indication that Builders around the country are discounting their current inventory to get it sold, not a turnaround for increasing inventory some are experiencing around the US.

This 13.2% increase is the biggest increase we've seen since 1993.

The 11.1% DECREASE in Median prices is the largest single month decrease in history based on information from the US Commerce department. April's median home price declined to $ 229,100.

Seattle and Portland are doing well. You wouldn't think so if you read last Sundays headline on the front page of the Seattle newspaper... "Seattle real estate goes from Sizzle to Simmer..." I actually read the article, and in a nut shell, our Seattle housing appreciation rates have dropped from 16% all the way to 13%. Forgive me, but the Seattle and Portland markets are the only two double digit growth areas in the top 42 metropolitan markets in the United States. Enjoy the growth and let's try to keep this slight correction under control in the media.