Everyone has a dream to own a home. Owning a house is one of the biggest achievement you have in your life. Unfortunately, the dreams of many shattered when they step into the reality where they find it insurmountable to own a house because of high inflation and rigid rates of the mortgage. There was a time once when lending was much common, but with time gradually it became almost next to difficult to obtain it. The convenient lending habits were one of the strongest factors that led to the bubble burst in 2008. This resulted in a devastated economy, and the housing market fell in an explosion.
The trends since then have observed a negative graph for the housing loan. To earn a mortgage to own a house, you need to have pristine credit. One thing is for sure that the lenders cannot come back to the same free lending policies after the disaster of 2008, but few things could be done to earn a mortgage loan. Your credit score is the most vital element that helps you secure a mortgage. If you have a credit score above 750, then you are very much eligible to acquire it but if you have a score lower than that then your chances of attaining it get slimmer and slimmer. The research forecast this year informed us about the fact that out of the 430 billion in mortgage organizations, 60 percent of the mortgages were awarded to those who had a credit rating of above 750. The people who had the credit rating from 600 to 650 only received 6 percent of the total mortgages offered. If we compare this trend with that of 2004, then we get to know that people who had credit ratings of 750 and above received mortgages of around 20 percent whereas those having the credit rating of 600 to 650 received the mortgage around 8 percent.
The trends clearly suggest that the mortgage lending for those with lower credit score has decreased. One more point to ponder upon is whether the banks have become too risk aversive regarding lending? Sources suggest that it might be a reason as well because banks feel insecure to lend mortgages to people who they think might not be able to return it and the mortgage loan might turn default. Moreover, people are themselves afraid to opt for a mortgage because they fear that house prices might go up with time which means that they would have to face increased down payments and higher mortgage rates. It is because of this the gap between high credit score and low credit score individuals is growing. A policy needs to be introduced to bring this to a stable state where lending is done to help people who have the potential to pay off the loans in the future regardless of their credit score. There can be other modes to find out the credibility of a borrower.