Tight Credit Market

loan rates lowHow do banks make money? 

By lending.  Is the current lending freeze going to continue?  Doubtful.

Zero percent down programs still liter the information super highway.  Traipsing over to Google’s site shows many lenders are still alright with zero percent down, three percent and five percent programs.

Of course the difference between these programs and the zero-down programs of yesteryear: 30-year fixed, full-doc* loans.  In other words, you have to prove you can make the payment.

At this moment, many lenders are taking a pause while waiting for the $700 billion to kick into the lending programs.  Once banks have the “bad” loans off their books, they can do what they are supposed to do: lend money.

What does this have to do with you?

Anyone going after mortgages is now going to have to face the scrutiny of proving not only income but also credit worthiness. Fannie Mae and Freddie Mac are ensuring loans that check both of those items. Nearly all lenders are only doing loans covered by the lending twins.

Even if you have no plans to buy that this moment, getting your credit affairs in order would be the next best thing.  Continue reducing your DI Ratio.  If that’s already done, put money away to help out with the expenses of purchasing that investment property.  Either way, it’s time to take advantage of the market.

Leave a Reply

Your email address will not be published. Required fields are marked *