Bad credit will soon to be redefined?
Those of you who think that your bad credit isn't quite bad, may get a shock quite soon. As anyone with bad credit knows, it is difficult to obtain a loan, never mind home mortgage. Several sub prime lenders have just upped their requirements and the picture is not very promising.
Minimum credit scores to be increased
The credit score threshold will be raised quite significantly, and a previously acceptable bad credit score would make mortgage simply unobtainable.
Lenders will require higher reserves
Right now 2 months of PITI (Principal, Interest, Taxes, Insurance) reserves are required. I am expecting a steep increase, likely to 6 months. So instead of having $4,000 in a bank for $2,000 monthly PITI, you may soon have to come up with $12,000.
Bad credit "No Money Down" programs will become a thing of the past
With a huge inventory of unsold homes, many banks are unable to get enough money to cover the mortgages they gave. You see many homes being foreclosed or at pre-foreclosure, where lenders will only likely to recover 70% or less of the mortgages, homeowners were given.
You would have to have a high credit score to get qualified for 100 percent financing.
Mortgage lates will likely become a "show slower", if not show stopper
From what I hear, many sub prime lenders consider to tighten up screws on the mortgage lates more than you care to imagine. Some are suggesting no more than 2 x 30 day or 1 x 60 day mortgage lates will be allowed. Presently, some allow 4 x 30, 2 x 60 and 1 x 90 day mortgage lates.
Will try to keep you posted. But those in a need of credit repair - beware ...
Fri Feb 9, 2007 05:02PM by Tony | More in Credit Repair | Comments (0)
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