approved. The reason for this is because lending is altogether a different market now. If you are trying to get a house, you definitely better have good credit, but that’s not all. Lenders are going back to what was called the plain old vanilla loans. In other words there is not much creative financing anymore. Here are some examples.
Stated loans
Stated loans have been loans designed for individuals that are self employed and could not show much income. In a lot of cases self employed people write off as much as they can on there income tax returns. So this type of loan was invented for them. Well IRS is trying to get rid of these loans. I am sure you can imagine why.
No Doc Loans
This type of loan was for the excellent credit borrower. With this loan you did not document anything, no income or work history. You just got a loan based on your excellent credit history. This loan is no longer being provided.
Limited doc loans
These types of loans are loans where you state you income without proof, but you verify your assets. This loan is still around but is difficult to get done, due to there not being a market for the loan. You need at least a 720 plus score to get one of these.
Conventional Loans
Most banks are requiring a 680 credit score just to get in the door with this type of financing. IN the past a 650 was considered a good credit score, but you better have at least a 680 middle credit score to get this type of financing. Plus you will need a minimum of 5% down.
FHA mortgage loans
These types of loans are typically not credit score driving. Now you have to have at least a 580 credit score to get most banks to underwrite your loan. We are starting to see a pattern where the credit score requirement is being raised to 620.
So you can see you may of thought you had good credit scores, but due to the bar being raised by the market, you might have problems especially if you financing needs to be creative.
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