While the housing market in Florida is starting to stabilize, many first time home buyers are struggling with stricter standards imposed by banks and lenders. Despite incredibly low mortgages rates and reduced housing prices, many aren’t getting approved due to new financing restrictions in their contracts. Because first time buyers are a significant part of nation’s housing market, many experts believe this could be a serious issue for the economy.
Possible Easing of Tough Buyer Restrictions
According to the National Association of REALTORS, first-time buyers should account for 40 percent or more of home sales nationwide in a healthy economy. However, last May, they only accounted for roughly a third of home sales throughout the country. As a result, both the Federal Housing Financing Agency (FHFA) and the Federal Housing Administration (FHA) are taking steps to persuade lenders to alter tougher restrictions.
Many experts in the industry say the reason banks and lenders are putting in more rigorous standards is because they are practicing so-called “defensive lending.” Much like what doctors due to reduce the risk of litigation, lenders are running more requirements and checks than necessary. Moreover, banks are uncertain about upcoming mortgage regulations that will occur for future lending when new legislation kicks in.
Higher FICO Scores, Fees, Down Payments
For instance, The FHFA oversees Fannie Mae and Freddie Mac which combined with the FHA make up about 90 percent of all home loan funding. They generally accept FICO credit scores anywhere between 660 and 680, however, many lenders are requiring some 100 points higher. In addition, lenders are requiring extra fees and larger down payments.
Lenders say that if the FHA and the FHFA want to make reforms, they want to be treated more fairly when homes go into default. Accordingly, it looks the industry is still struggling to find the right balance of regulation after the housing market collapse. Nonetheless, many are hopeful that the two national agencies will help first-timers in Florida by convincing lenders to ease up on the new restrictions by the end of this year.
Find out from Winter Park bankruptcy attorney Eric Lanigan or Roddy Lanigan what it is that you can do to better qualify for a Florida new home purchase. After bankruptcy the Lanigans work with clients to help rebuild credit which can rebound rapidly with the right activities, saving and spending plans.