In recent years, lower credit scores have created a situation where borrowers have been denied loans, creating a pent-up demand in the market. In May, credit eased and we are starting to see a shift in the mortgage industry because of it. As you look at the trends in the market, you will see that Jumbo loans are more sought after, and credit is loosening.
Why Credit is Loosening
The Mortgage Bankers Association showed that there were two main reasons for the loosening of credit in the industry. Lenders have relaxed the lending purse strings at both ends of the market. First of all, Jumbo loans are becoming more available and more frequent. The second reason is that first-time home buyers are able to get government-backed loans more easily because the credit score requirements for the Federal Housing Administration (FHA) have decreased. If you have a lower credit score, you may be able to qualify for a loan that wasn’t previously available.
With these changes, there are more potential buyers who can now qualify for a loan that is needed to buy a house. As such, we will likely see continued changes in the mortgage and housing industries.
How to Make your Business Grow
As a Wholesale and Mini-Correspondent lender, we are paying attention to these trends to help loan originators grow their businesses. Through the past few years, things have been up and down for everyone in the industry. But, if originators keep up with the changes that are happening, they will be able to adjust their businesses accordingly.
One thing that originators can do right now is to target the under-served market of people with lower credit scores. These people are largely ignored because of their credit score problems, but they might be able to qualify for a loan now. Additionally, the Jumbo loan market is a great share of the market to consider, because these people are also largely underserved at the moment. We offer FHA financing for borrowers with credit scores as low as 580 FICO, and Jumbo loans with credit scores down to 680 FICO.
Even though the Jumbo market is a great option to consider, keep in mind that you need to distinguish yourself from the other competitors. Other loan originators are seeing the gap in the market, so everyone is stepping in to jockey for the business that is available. The best way for you to win out over your competitors is to make sure that you are setting yourself out from the rest.
As time passes, it is natural for credit to be eased, and people become more comfortable with the idea of buying a new home. Additionally, people are seeing signs that the economy is continuing to improve. These factors help to boost the housing industry, which has been stalling out in previous years because of the rough economy.
I can help keep you up to date about the changes in mortgage programs and other changes that are happening within the mortgage and lending industry. I invite you to take some time to look through the pages of my website DaveKevelighan.com, or you can also call me at (303) 520-0004 and email me at [email protected].
