Home Ownership Gets Tougher – That’s a Good Thing
Business week reported this week that major banks are imposing tougher standards on FHA loans. Last week NPR ran a similar piece about tightened mortgage underwriting standards in general. In each story, folks (potential buyers, real estate agents, etc.) were complaining how tough it was for folks with less than stellar finances to qualify for a loan.
Stop the whining already!
Now things have moved the other direction. No more liar’s loans. No more stated income loans. Few or no zero-down loans. Hallelujah and Amen.
That’s a good thing for a stable, sustainable housing market.
If real estate agents and builders had their way, easy money would be the norm again. They want transactions. That’s how they make money. Some folks with lousy finances still think they should be homeowners – now.
Sorry. The tough lending standards should be perceived by rejected borrowers as a message and incentive to clean up their financial house. Come back looking for a mortgage when you are 100% ready. Until then, rent and save. In the long term, that will help everyone.