Years after the housing market crash, one thing is certain: it’s incredibly difficult to qualify for a mortgage, and that fact is significantly holding back the housing market recovery. Thankfully, mortgage giants Fannie Mae and Freddie Mac took notice and, just this week, instituted new lending guidelines that will make mortgages easier to obtain for Main Street homebuyers.
The new, less rigid standards mean borrowers with lower credit scores have a much better chance of qualifying for a home loan. In the past, lenders were extremely selective when approving loans because of the penalties they faced when approving bad mortgages. The result was a reluctance to approve anyone without stellar credit and, subsequently, a sluggish market rebound.
Don Frommeyer, CEO of NAMB – The Association of Mortgage Professionals, believes the new regulations are appropriate and will go a long way to positively influencing the housing market.
“There are so many instances where a responsible buyer couldn’t finance a home because of one credit problem, such as a temporary job loss or foreclosure,” says Frommeyer. “The looser credit restrictions will put a lot of people back in homes and, we hope, will encourage Millennials to consider buying their first home sooner rather than later. I expect to see the number of approved mortgage applications skyrocket in the coming months.”
Frommeyer adds that healthy employment numbers and record low rates mean little if people can’t secure a mortgage loan. “This is exactly what we need…not just for the housing market, but for the economy as a whole,” says Frommeyer.