Purchasing A New Home May Become Harder for New Buyers
As government officials, both Democrats and Republicans, discuss how to reform the housing finance industry and to avoid, another major credit crises, it is no surprise you will need to have a good amount of money down, better credit, and pay extra fee’s to cover risks and premiums for federal guarantees on government backed loans.
Getting back to sound credit decisions is a no brainier, however, with tighter guidelines this will rule out a lot of people from even entertaining the idea of home ownership. Prices and housing are already in slum that may last well into the years to come. Having tighter restrictions on getting a loan is fine, but too tight and well that just spells disaster.
After all, wasn’t it the lenders fault to begin with? With their amazingly loose guidelines, like the stated income loans, where one did not have to actually disclose their real income, or no doc or no asset loans? Come on now really? The whole point in establishing credit is to show creditors, “I am a good credit risk and see I make my payments on time”. So how about we use some actual common sense. Granted some people have had a good credit history and may have had a medical issue or a brief unemployment, and maybe now do not have good scores. But the road to better credit is sometimes long and hard if you do not know what you are doing or how it works. Clearly we are in this mess because the lenders and investors maybe got a little too greedy and gave home loans to people who obviously didn’t warrant a loan.
This is a simple fix. Getting back to the basics of sound judgment and underwriting. The underlying issue I believe is not just about home loans, it is how most Americans live well beyond their means. Don’t save money for a rain day, just slap it on the old credit card and deal with it later! Today is not the good ole days when people stayed in their homes for life, and had the same job for most of their lives. Today most homeowners only stay in their property between five to ten years? Job security was not what it once was and may never be again. We have evolved to be more mobile, agile and to live off of credit.Continued on the next page