It’s not easy to get a loan these days, say housing experts. Even home buyers with excellent credit are struggling to get approved for a loan, as home lending standards have tightened to some of their strictest level in decades.
Tightening credit is affecting home sales and hurting the housing industry’s recovery, economists note, as more borrowers face increased scrutiny in qualifying for a loan at the best rates. To get the lowest interest rates, home buyers are having to come with higher credit scores and larger down payments than just a few years ago, as well as having to show steady employment, verify assets, and even explain new credit cards and small bank account deposits, USA Today reports. Banks hope the higher standards will lead to fewer future defaults.
“It used to be anybody with a pulse could get a home loan. Now you have to be an Olympic athlete,” Guy Cecala of Inside Mortgage Finance, told USA Today. “The pendulum has swung too far.”
Source: “Tight Standards Make Mortgages Tough to Get,” USA Today (Sept. 14, 2011)
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