There’s no question that over the last few years the housing market has been on a gradual recovery. Those who were once afraid to purchase a home or simply unable to do so have been able to ease back into the housing market and find the home that they want for themselves and their families.
However, steps are still being taken to assist in improving the ability for many to secure home purchase loans. Recently, Fannie Mae and Freddie Mac – the two largest lenders in the nation – have agreed on terms that can help remove some barriers to borrowing money and make it easier for Americans to secure loans for a home. By adding more flexibility to the process, it’s hoped that the housing market will receive an even larger boost and that more Americans will be able to buy the home they want.
The problem with the last few years has been a tighter level of restriction on loan applications. Due to the bad loans and government intervention on the lending market, lenders began to make it much harder to secure loans – only those with impeccable credit could receive a loan. This new agreement works to change that. Some of the things that are changing include:
- Lower Down Payment Requirements – Down payments have long been one of the keys to securing a loan since they informed a lender that a borrower was serious about the loan. However, the days of requiring a 20% down payment are gone for the most part. This new agreement means that most Fannie Mae and Freddie Mac loans will require only a 3% down payment – something that is comparable to the FHA loans that have helped many purchase their first home.
- Lower Credit Scores Required – Additionally, credit score requirements are dropping as well. In the past, the minimum credit score had ranged from 620 to 680 depending upon the lender. Now, that number is being lowered to 580 in some cases. This should help many who have suffered in the recent economy to be able to secure a loan and start getting back on their feet.
- More Flexibility – In general, there will just be more flexibility from lenders. Even homeowners who have assumed that they wouldn’t qualify for a loan will likely now be able to secure one under these new agreements.
With these changes, the hope is that those who dream of home ownership will be able to make that dream a reality and that the housing market will continue its recovery. Its good news for everyone involved.