Is Mortgage Underwriting Getting More Friendly?
It looks like banks are less scared of mortgage loans these days.
It is worth noting, however, that not a single responding bank said its guidelines had eased. For now, getting through underwriting is still much tougher than it was 2 years ago.
Some of the changes today’s borrowers face include:
- Higher minimum FICOs
- Larger required downpayments and equity ownership
- Higher income levels versus monthly debts
- Larger reserve requirements
Furthermore, second mortgages are scarce when loan-to-values exceed 80 percent.
The underwriting changes of the last 24 months preclude many Americans from getting access to today’s low rates if the Fed’s reported trend continues, that could reverse before the end of the year.