Freddie Mac has announced a few changes in their underwriting standards and effective February 2, 2009 they will no longer be buying “Stated Income” mortgages at all. In addition to outlawing stated income loans, the new maximum debt-to-income ratio will be 45% and new minimum credit scores will be increased.
The bottom line of these recent changes?
- Be able to document your income.
- Plan on buying a home that you can afford.
- Pay your bills on time and keep an eye on your personal credit worthiness.
If you do these three things, you will be just fine when applying for a mortgage!
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re: 1-3. What? How crazy is that? You mean, people should work and live within their means AND pay their bills? Is that fair?
@Nick, it never ceases to amaze me how many people try to ignore these 3 simple things.
When someone comes to me with a scenario and wondering if they can get qualified, I try to mention these three simple things first.
The most common response I hear after telling someone to “get a job, buy a house they can afford and pay their bills on time”?
“uh… yeah, but…”
And then the fun begins!
Thanks for the article here on tightening guidelines. Long term, this will bring some stability and sanity to the market.
This is an important trend to get people to purchase homes within their means, budget, and save to do so. Especially this last one. People are going to have to learn to save up to buy what is important to them.
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