Do mortgage companies approve more loans in a slower market?

Question

I am buying a house in what was a hot market and now it is real slow. I just wondered if they are as pickey in a slow market.

Answer 1

They tend to tighten their guide lines because their pool of borrowers in smaller. So they want better loans with less default.

Answer 2

The market doest really have too much of an effect on approvals. The factors that are in approvals are your credit scores, the property values, your work history and other factors.
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Answer 3

It really depends what aspect of your approval you're referring to. If it's your credit score or Loan-to-value, chances are the basic guidelines of a lender haven't changed.

If you're talking about untangibles like questionable occupancy or questionable stated income, you may slip through the cracks during cool periods in the market. At the same time, as someone here mentioned, the appraised value of your home is more at-risk due to the slow market, so you could end up with a cut appraisal review.

But if you're simply trying to submit a sketchy deal, you probably do have a better chance of getting it approved because lenders are more desperate right now for deals because of the relative scarcity.

For more information, check out:

http://www.thetruthaboutmortgage.com

Answer 4

Lenders approve more loans depending on their funds availability, not on a slow market - if your definition of the market is real estate sales transactions.

Funds availability depend, of course, on any saleable long-term security, i.e., treasury notes, etc.

Overall, lender guidelines remain the same - either on a tight or lose market. They only change guidelines when new products become available, i.e., the new offering of a 40 and 50-year terms, new hybrid programs of adjustable mortgages accommodating for borrower's payment affordability, and so on and so forth.

Your approval of a mortgage loan will be based on a standard guideline and not on the market's climate.

Hope this answered your question. Good luck!

Answer 5

If you mean the housing market, no. Mortgage companies could care less what the housing market is doing in a particular sector.

However, it could affect your approval because of the appraisal. If homes in the neighborhood haven't been selling, or have been selling for lower amounts, then it will definitely affect the appraised value and ultimately your loan approval.

Rick Lanicek
www.primelendingonline.com

Answer 6

They are not as pickey - but some lenders have stated that for 100 percent financing - they have raised their mid score from 580 to 600 to get the 100 % financing needed. I underwrite for 150 companies, and most are still at 580 mid, a few at 575 mid (with the rate being higher).

As long as you have 2 year job time, 2 yr rental history, 2 yr W2's, and your income and debit ratio's are at 55 or less than you can get financing.

Answer 7

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Answer 8

I would think with a slower market they would have MORE time to be more thorough with the loan process. Since the Loan Processor/Officer doesn't have 50 files sitting on their desk waiting to be delt with.

Answer 9

They are more pickey because there is more risk in a slower or declining economy.

Answer 10

They are not as picky when it's slow, just because they need the money.