In spite of record low rates, lenders more cautious to issue loans than ever before
Gene J. Puskar, AP
Despite the lowest interest rates on home mortgages since at least the 1950s, banks are hesitant to extend more loans, according to the Wall Street Journal.
Recently, Fannie Mae and Freddie Mac started forcing banks to buy back the broken loans they sold them before the recession.
In order to prevent this from happening again, banks plan to protect themselves by tightening restrictions on future loans. Bank statements, tax returns, appraisals, pay stubs and multiple credit checks are some of the documentation needed to secure a home loan, according to the Wall Street Journal.
"Why do I care about that $100 deposit? Why am I triple checking your credit score?" Barry Sturner, president of Townstone Financial, a Chicago lender, told the Wall Street Journal. "Because I'm scared to death of the buyback."
The average loan application to be turned down in the month of August had a credit score of 734 and a down payment of 19 percent, according to the Wall Street Journal, citing Ellie Mae, a mortgage software provider.
Have you been turned down for a mortgage due to stricter rules? Let us know by commenting below.
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