One extremely important part of the home buying process is qualifying for a loan. You can look at every house on the block, but unless you can qualify for a loan or come up with a ton of cash, no one will sell you their home. For this reason, it’s good for homeowners to understand the mortgage market; where it’s at, where it’s going and how it will affect them.

Mortgage rates are at record-breaking lows, and we’re all aware that the real estate market is near its bottom. Now is definitely a great time to buy. Lenders, however, are tightening up on their lending criteria, making sure each borrower is full qualified. Getting a loan has always required a ton of paperwork and verification, to ensure that a buyer has the means to pay back the loan. The process can take months, and can even put your home buying experience on hold. What you may not know is that Fannie Mae and Freddie Mac have tightened up their lending requirements. They recently announced they would be asking lenders to buy back any loans that don’t meet their guidelines.

Buying back a loan is nothing new in the mortgage industry, but it’s generally been used for non-performing loans—loans that were not being paid back. Buying back a loan can be damaging to a lender, because that means they have to fund the loan, leaving them less money to lend out to new borrowers. If they have to buy back too many loans, and their lending supply runs out, they can easily go bankrupt in a matter of months. The idea of buying back performing loans that don’t meet Fannie Mae and Freddie Mac’s new guidelines is very frightening for lenders, so they will most certainly tighten up their own guidelines to preserve their company.

What does this mean for homebuyer hopefuls? Lenders will be tightening up. Most lenders already make of point of unearthing your entire financial history, but with these new guidelines, they may be more strict about who they lend to. Sometimes even the most financially secure individuals can be denied if they can’t prove they have the means to pay back the loan.

Another change, that will only affect veterans applying for a VA loan is a new funding fee. A new government legislation will require a VA loan applicant to pay a full fee at the time of application. If the legislation is not passed, part of the fee can be rebated, but make sure to talk to your lender about the new legislation before getting started. If you’re looking for Denver real estate for sale, contact a Denver real estate agent to learn more about the home buying process.

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