Mortgage Monday: How Hard Is It to Get a Home Loan?

How Hard Is It to Get a Home Loan?

There is a lot of disinformation among some of my friends and neighbors about how difficult it is to get a home loan, or for that matter, a home equity loan.

I do not know where all this disinformation is coming from, but I will try to dispel some of the untruths.

The standards for qualifying for a home loan have gone back to the standards prior to the housing bubble bursting. Remember those times? You didn’t need to¬† prove your income and almost any credit rating would get you a loan. We found out what a problem those standards made for the financial health of the home loan market, didn’t we? To avoid the problems created by those standards, the banks went back to the old way of loaning money for houses. Now you have to prove how much you make and have a credit score of at least 620.

Word got out very quickly after the new (old) standards were announced that the reason for the shift was that banks had no money to loan. Fannie Mae and Freddy Mac were in upheaval and on the brink of bankruptcy. The Federal Government took them over and started buying housing loans again. Money started flowing back into the housing market.

However, a lot of people did not qualify for home loans. If you think about it, you will see that a lot of people were given loans who could not pay them back, hence all the defaults of the loans that put Fannie Mae and Freddy Mac into bankruptcy.

If you loan money to people who cannot pay it back you are asking for trouble. Don’t get me wrong, there were a lot a of people who could pay their loans back, but lost their incomes and with it the ability to repay the loan. But there were a lot of people who entered the housing market who did not make enough money to repay the loan that unscrupulous lenders loaned to them. The lender wasn’t worried, because Fannie Mae and Freddy Mac were there to bail them out by buying those bad loans and taking the risk away from the lender.

Now the standards for a home buying loan are back to where they should have always been. If you want to buy a home, you will need to get your finances in order and improve your credit score. Every loan officer out there will be a good resource for you to get your ducks in a row so that you can qualify for a home loan.

Start with a budget and live within your means. Don’t rely on your credit cards to help you buy the things you want. Pay your balance off every month you use your credit card. Pay your bills on time. These suggestions will help you on your way to getting a home loan to help you buy your dream home.

When you have qualified for a home loan so that you can buy a home, call me at 253-229-5399 and I can help you find your dream home.


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