We have been involved in the mortgage industry for almost 40 years. We have been through the easy times and the hard times. And we know that financing a house, getting a mortgage, refinancing an old mortgage or any other relevant procedure has been an evolving ongoing story… Needs knowledge, experience, and basically accurate advice. Here is a related article that we think it’s helpful.
Getting a Mortgage is easier now!
Clearing the hurdles to qualify for a mortgage used to be much harder. House hunters with too much debt had their home-buying hopes dashed after being denied a mortgage. That’s changing as mortgage lenders ease lending guidelines to expand mortgage credit to more people.
Borrowers with a high debt-to-income ratio now have more leeway than since the subprime mortgage meltdown of a decade ago. Your debt-to-income ratio, or DTI, is the percentage of monthly income you pay toward your monthly debts, including a new mortgage payment. It’s a key factor — along with your credit — that lenders use to determine whether you can repay a loan. The more debt you have, the higher your DTI ratio — and that’s a red flag for lenders evaluating your potential for risk.
That’s changing as mortgage lenders ease lending guidelines to expand mortgage credit to more people.
How getting a mortgage has gotten easier
Conventional lenders charge higher interest rates on high DTI loans to mitigate their risk. They also require a higher FICO score and more cash reserves.
Raising DTI limits is just one-way lenders have made it easier to get a mortgage. LTV ratio increases help borrowers who don’t have a large down payment. However, you’ll pay private mortgage insurance when you put less than 20 percent down — and you might not be able to borrow as much as you need to buy a home.
Some conventional lenders have rolled out their own low down-payment programs without private mortgage insurance in exchange for a higher interest rate. Government-insured loans require little to no down payment, and generally, have more relaxed credit score requirements than conventional loans.