Five Year Florida Mortgage Loan Strangle Hold May Be Loosening
Florida mortgage loans may now be a bit easier to get, thanks to banks loosening some of their underwriting guidelines.
The Federal Reserve conducts a quarterly survey of its member banks and, last quarter, not a single responding bank reported having tightened its mortgage guidelines for prime borrowers.
So, What’s a Florida Mortgage Prime Borrower?
A “prime borrower” is defined as one with a well-documented credit history, high credit scores, and a low debt-to-income ratio.
53 banks responded to the Fed’s survey and none said that mortgage guidelines “tightened considerably” or “tightened somewhat” between September and December 2011; 50 said that guidelines remained “basicaly unchanged”; 3 said that guidelines “eased somewhat”.
Florida mortgage applicants often relay that they have a heck of a hard time getting loans through the underwriting process.
Not since before the recession have banks lowered mortgage approval standards like this, and it bodes well for this year’s Florida housing market. Real estate agents report that 1 in 3 home sale contracts fail with “declined mortgage applications” as a leading cause.
Looser Florida mortgage lending standards should mean more home loan approvals for buyers, and fewer contract cancellations. This can spur the housing market forward.
Make note, though. “Looser standards” should not be confused with ”irresponsible standards.” It’s still more harder to meet bank standards as compared to 5 years ago. Today’s underwriters are more conservative with respect to household income, overall assets and credit scores.
Florida Mortgage Requirements Compared to One Year Ago
Even as compared to one year ago:
- Minimum credit score requirements are higher
- Downpayment/equity requirements are larger
- Maximum allowable debt-to-income ratios are lower
For buyers and refinancing households gaining approval, though, the reward is the lowest mortgage rates in a lifetime. Mortgage rates in Florida continue to fall, helping home affordability reach new highs.
If you’re in the market to buy a new home or refinance one, your timing is excellent.
