New Buyer Qualifications will force down prices further

freedomCM_IHB

freedomCM_IHB

New member
<em>mr. mortgage comes through with the brick in the housing industry's window:</em><strong></strong>



<blockquote>

In CA (other states as well) due to mortgage insurer ?challenges?, the MINIMUM credit score required to do any loan (Fannie/Freddie included) over 80% is now 720 from the previous 620. I am not sure the percentage of folks with over 720 scores vs. under but regardless, this will take a massive number of people out of the market.</blockquote>


http://mrmortgage.ml-implode.com/





So even though FHA/Fannie is offering 5% down, only people with more than 720 (what, 5% or under?) score can do that.





The other 95% of <strong>buyers will now have to have 20% down to get a mortgage in the state/US</strong>
 
That's a good sign. Too many people bought homes they couldn't afford. They should also have strict income requirements...even more specifically a homebuyers net income minus all debts should be verified and strictly enforced. I've always wondered how these young couples with 3 kids could afford 2 million dollar houses. I guess the answer was they couldn't.
 
[quote author="freedomCM" date=1226573036]



So even though FHA/Fannie is offering 5% down, only people with more than 720 (what, 5% or under?) score can do that.





The other 95% of <strong>buyers will now have to have 20% down to get a mortgage in the state/US</strong></blockquote>
Not quite accurate: <a href="http://www.bankrate.com/brm/news/credit-scoring/20031104a1.asp">http://www.bankrate.com/brm/news/credit-scoring/20031104a1.asp</a>



Looks like a fair estimate of a FICO > 720 would be around 40%.
 
FHA will do loans for people with really low scores... the fees and rates are higher, so this limits the amount they can afford, but they can still get a loan with minimal downpayment. I just read this in an article that came out on Tues.



<blockquote></blockquote>FHA borrowers typically have less money ? often, none ? for down payments and poorer credit than conventional borrowers. While most FHA loans require down payments of at least 3 percent, the entire amount can be a gift from a friend, a relative or other sources as long as it isn?t from the seller. The FHA does not set minimum credit scores for borrowers and allows them to have blemishes in their credit files that would prevent them from obtaining conventional loans. The agency?s rules also let borrowers qualify with the help of co-signers ? friends, parents or other relatives ? who will not be living in the mortgaged home.



<blockquote></blockquote>


<a href="http://www.msnbc.msn.com/id/27599014/">Is boom in FHA lending cause for concern?</a>
 
720 isn't that hard... even with some blemishes from a few years back, but low utilization of available credit you can be at 750
 
[quote author="opuswon" date=1226597954][quote author="freedomCM" date=1226573036]



So even though FHA/Fannie is offering 5% down, only people with more than 720 (what, 5% or under?) score can do that.





The other 95% of <strong>buyers will now have to have 20% down to get a mortgage in the state/US</strong></blockquote>
Not quite accurate: <a href="http://www.bankrate.com/brm/news/credit-scoring/20031104a1.asp">http://www.bankrate.com/brm/news/credit-scoring/20031104a1.asp</a>



Looks like a fair estimate of a FICO > 720 would be around 40%.</blockquote>




The problem with looking at population values, is that it includes a whole lot of people who will never be in the market for a house. A large proportion of the people with high scores are retirees, and over 50s who are set in their house for life.



The other problem is that the information on bankrate is historical. Right now, lines of credit are being drastically reduced, forcing many people with formerly >720 scores down 50-100 points because their credit utilization is way up.



I wonder if any lenders here (lendingmeastro?) have better information?

<strong>

I'll stand by my 5% guesstimate for house buyers with FICO>720 going forward.</strong>
 
[quote author="stepping_up" date=1226622203]FHA will do loans for people with really low scores... the fees and rates are higher, so this limits the amount they can afford, but they can still get a loan with minimal downpayment. I just read this in an article that came out on Tues.



<a href="http://www.msnbc.msn.com/id/27599014/">Is boom in FHA lending cause for concern?</a></blockquote>




and mr. mortgage said that tuesday all of the mortgage insurers changed their quals. Even if you get FHA, you still need to get MI if you have less than 80% LTV. So it is either 20% down, or FICO <720 after Dec 31, which means the loans lock Nov 14.





<strong>The MIs will no longer write insurance for people with less than FICO 720.</strong>
 
[quote author="freedomCM" date=1226629056][quote author="stepping_up" date=1226622203]FHA will do loans for people with really low scores... the fees and rates are higher, so this limits the amount they can afford, but they can still get a loan with minimal downpayment. I just read this in an article that came out on Tues.



<a href="http://www.msnbc.msn.com/id/27599014/">Is boom in FHA lending cause for concern?</a></blockquote>




and mr. mortgage said that tuesday all of the mortgage insurers changed their quals. Even if you get FHA, you still need to get MI if you have less than 80% LTV. So it is either 20% down, or FICO <720 after Dec 31, which means the loans lock Nov 14.





<strong>The MIs will no longer write insurance for people with less than FICO 720.</strong></blockquote>


FHA is their own insurer.
 
[quote author="freedomCM" date=1226573036]<em>mr. mortgage comes through with the brick in the housing industry's window:</em><strong></strong>



<blockquote>

In CA (other states as well) due to mortgage insurer ?challenges?, the MINIMUM credit score required to do any loan (Fannie/Freddie included) over 80% is now 720 from the previous 620. I am not sure the percentage of folks with over 720 scores vs. under but regardless, this will take a massive number of people out of the market.</blockquote>


http://mrmortgage.ml-implode.com/





So even though FHA/Fannie is offering 5% down, only people with more than 720 (what, 5% or under?) score can do that.





The other 95% of <strong>buyers will now have to have 20% down to get a mortgage in the state/US</strong></blockquote>




Ok this is what I dont' understand. 5% sounds great in 'theory', but when you actually want to have a reasonable DTI ratio, I can't imagine anyone can *afford* only 5% down. If you have the salary to support a mortgage for 95% of 400k or something, it shouldn't take you that long to save the goddamn down payment!



I think I make decent money for someone my age (only my lawyer friends are soaring past me and a few at more prestigious programming positions), so even though I'm perfectly qualified for the 5% down, I can't actually afford it!
 
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