Have home loans swung too far on the pendulum?

April 20, 2011
By

home loanMany blame the economy at least partly on the recent home loan situation — too many people being approved for loans they couldn’t pay. But now, it seems that more and more lower-risk borrowers are being turned down for loans, as well.


CNNMoney.com discusses this issue
: As it turns out, bank loans are now harder to get. Within the past few years, credit score requirements have gotten higher. But there are also other new requirements.

Now, for example, if you’re trying to buy a condo, a higher percentage of other condos in the development have to be sold before a loan will be approved. The total debt you have must be a smaller percentage of your income. There’s also a longer wait if you’re rebuilding your credit after a foreclosure, and more liability if you are late for even one credit card payment.

While I think some adjustments are a good idea, it seems that the common thought is the pendulum is swinging too far in the other direction, making home loans too difficult to get. In fact:

A quarter of all mortgage loan applicants get denied for loans, according to the Federal Reserve. Many other potential homebuyers never even try to get loans, said Jerry Howard, president of the National Association of Home Builders. “The pendulum has swung too far in the other direction,” Howard said. “This overreaction is retarding the housing market recovery.”

What do you think? Will this impede recovery of the housing market, or will making loans more difficult to get lead to a bigger benefit in the end?

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5 Responses to Have home loans swung too far on the pendulum?

  1. [...] more on their home than what it’s worth. As a result, even borrowers once considered low-risk are having a harder time securing a home loan. As a result, many people are finding themselves in a position where they have to [...]

  2. Grout Cleaning Boca Raton on May 7, 2011 at 5:14 am

    Thanks a lot for your interesting post. I have been searching for such message for a very long time.

  3. Loans on May 25, 2011 at 4:54 am

    Now, it seems that more and more lower-risk borrowers are being turned down for loans, as well. It’s really nice.

  4. Loans on May 25, 2011 at 4:54 am

    Now, it seems that more and more lower-risk borrowers are being turned down for loans, as well. It’s really nice.

  5. Bad Credit on June 8, 2011 at 9:42 am

    Really nice post… Its fact most of the people try to get low risk borrower but in future they sometime get in trouble too.

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