Fed's Latest Survey Shows Prime Mortgage Borrowers Are Getting Easy Mortgage Approval
According to the latest published article of The Mortgage Reports, now is the best time to refinance a mortgage or buy a home as mortgage rates dropped and most U.S. lenders are making easy steps to get mortgages approved.
For the seventh straight quarter in between October and December 2015, many mortgage companies have reduced their standards in loan approval. This is the main reason why more mortgage loans are getting approved than in any other period in U.S. history.
Lenders have equipped themselves with much better financing products and feel buoyed by the increasing U.S. real estate market. Because of this, banking institutions made new concessions for individuals with poor credit as well as for those with no home equity.
If one is concerned about getting rejected for a mortgage, it would not hurt to re-apply to see if there are any favorable new offers.
The Fed's latest Senior Loan Officer Survey showed prime mortgage borrowers have little difficulty getting mortgage approvals. It was reported that almost 18 percent of banks reduced their standards during the last quarter of 2015 while 3 percent have declared tightening. It is very obvious that getting mortgage approvals nowadays is easier.
Ellie Mae, a mortgage processing software provider that handles almost 3.7 million mortgage transactions, said that 7 out of 10 mortgage applications have closed in the last quarter. It is the highest percentage ever since Ellie Mae started tracking such data.
In another report, major lending companies said that they will start to approve mortgage applications for people with FICO scores of 580. This is 60 points lower than the standard 640 FICO score required previously.
This news came at a time when FHA loans are in high demand. Underwriting requirements on an FHA loan is forgiving and flexible considering that the program's 3.5 percent minimum down payment is the most lenient for homebuyers.