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The Changing Lending Landscape

by Stephanie Sims

stephanie-sims

Stephanie Sims is Chicago Agent’s managing editor.

When the recession began, interest rates plummeted, and though they have been creeping up steadily since, they remain historically low. The opposite is true, however, for guidelines for loan products– they tightened considerably during the recession, and have not seemed to loosen up much at all since then.

But the lending landscape is still changing – FHA and Freddie Mac have decreased their mortgage insurance premiums and down payment requirements, and mortgage applications surged a massive 49 percent the second week of January. With information like that, it appears that although the spring market hasn’t officially arrived yet, it’s looking like consumers are preparing to buy.

Credit requirements remain the same (read: fairly tight), and homebuyers will still need decently good credit to qualify, but with lower down payments, more consumers should be able to enter the market. Remember all those predictions about Millennials entering the market this year and actually buying? If they can qualify for a loan this year and if their student debt payments aren’t catastrophic to their finances, there may just be some truth to those predictions.

“In today’s real estate market, as long as people have decent credit, reasonably qualify in regards to income and sufficient assets for the down payment and closing costs, they can get a loan,” said Christopher Norris of BMO Harris in our cover story. “There are products that will allow people to purchase a home with as low as a 620-660 credit score and as low as a 3 percent down payment. It is also important to remember that in regards to lack of assets, there are many grant options to assist with the need for additional assets to have a sufficient down payment.”

While no one can really predict what the future holds for interest rates, it’s clear that the mortgage market is strong, and trends will hopefully keep moving in that direction. Even though rates are rising (which signals that our economy is strengthening, slowly but surely), they are still low – which is another incentive to buy.

What are your thoughts about the lending landscape and interest rates? What do you think will happen this year? Email me and let me know your thoughts stephanie@chicago.staging312.com.

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