If this headline caught your attention, I know that you are part of my generation. We are baby boomers. And Millennials will not recognize something form “Lost In Space”. But like the Robinson’s robot, I sense danger ahead. And I am not alone.
Yes – I know there is a lot of danger ahead, but the particular danger that I am seeing is that we may be heading for another housing bubble. Why do I think that? Because it keeps getting easier and easier to get a mortgage. And that was a major factor in the previous housing bubble.
Here are a few facts to back this up. In the past year:
Instead of the traditional down payment of 20% of the purchase price, more buyers than ever are putting down less than 20%.
The average credit scores of the borrowers are getting lower, as well as the fact that mortgage programs are accepting borrowers with lower scores.
There are more mortgage programs available that require lower down payments.
But even so, if you look at the data from the previous bubble, between 2004 and 2007, the requirements to get a mortgage then were much more lenient. Back then there were programs which would allow for no income verification. Others allowed you to state your own income, the lender would only verify that you actually work there. And with the no doc loans, all you needed was to have a good credit score.
Even with today’s more lenient standards, it is significantly harder to get a mortgage now than it was back in 2004 – 2007. And, even though it is easier to get a mortgage today than in the last few years, the lenders are not being totally irresponsible today.
To read more posts regarding the housing boom, please visit our web site. Or call me, Art Reiman, Realtor at 732-598-7700