Warning: Mortgage Credit Becoming Harder to Get
There may have been some loosening in mortgage lending recently, at least in a few niche pockets of the market, but the hard data surprisingly shows the majority of banks and lenders being even more cautious in 2013.
Commercial underwriters might be opening the flood gates and a few major banks say that they are more willing to loan on strong applications with 20% down and 720 plus credit scores. However, more lending institutions responding to a survey in 2013 say that they are less likely to approve home loan applications for those with less than 720 credit scores or 20% down payment than they were before.
But that’s going to change soon right?
Analysts interviewed by Inman News say quite the opposite. They think ‘Chicken Little’ might be quite the optimist in light of what is going on in financial markets today. They see the sky falling in and the earth dropping out from under us at the same time.
Why?
This doom and gloom is in response to Consumer Protection Act and Dodd-Frank rules set to come into play in the new year. Experts say they are “certain” this will mean fewer home buyers will qualify for loans and those that do will have to pay much higher fees. This is on top of interest rates jumping to a two month high at the end of May 2013.
Of course truly knowledgeable and savvy real estate investors and financial experts know that mortgage lending and access to credit will absolutely lighten up. There were plenty of media outlets and industry voices proclaiming the housing market would never turn around but it has, and these same macro cycles will inevitably and invariably lift the mortgage market as well, and even spawn new exotic loan programs.
Of course this may take a couple of years. In the meantime, at least for real estate investors there are plenty of alternative funding sources including transactional lending, hard money loans, private lenders and commercial mortgage companies offering bridge loans and blanket mortgages.
Those flipping houses really have little to worry about on the sales side either, at least for now. Demand is at an all-time high, there is plenty of room for growth and there is virtually endless capital to pay cash for real estate, even if it is mostly off the grid and not evident in regular economic reports.
Still, for those eager to make a killing in real estate, the time to make a big push while the stars are perfectly aligned for flipping houses is now.
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