What’s on your to-do list in 2011? If buying a house is on there, there are plenty of reasons why now is the time to do it.
Historically low interest rates, a large inventory of homes, and many buyers eager to sell are three incentives for pursuing home ownership, whether it be the first, second, or 10th home you’re buying.
However, if you think that lining up financing for that big ticket purchase is going to be a bit easier than it was in 2010, think again. In fact, consider the tightened up lending requirements of the past couple years, to be the new norm.
“In our opinion, we won’t see any easing in underwriting requirements in 2011 and beyond,” said Donn Durgan, regional president of Syringa Bank. “The secondary and regulatory market is going to keep underwriting in check.”
Durgan explained that when you turn in a loan application, you can expect close scrutiny of pay stubs, bank statements, credit history, tax returns, employment status and income.
In the past, 30-day closings weren’t uncommon, but in 2011, expect to see a longer timeline before you are handed the keys to your new home. This, Durgan said, is attributed to underwriters taking more time to review documentation, and requesting more paperwork, if necessary.
“You are going to see more of the 45- to 60-day closings and far fewer 30-day closing dates.”
Durgan also pointed out while some might be quick to blame banks for the increased scrutiny involved in the loan process, in fact, it’s regulators and the secondary mortgage market who mandate how each transaction is handled.
“We are just the messengers and don’t make up the rules,” he said. “This is challenging for everyone, which is why education is so important.”
Durgan said during the buying process, all parties need to understand and be comfortable with how it works, and what they can expect or might encounter along the way. As a homeowner, that concept makes total sense. Considering this could be the biggest investment of your life, having an idea of what you are getting into, including how each component works together, seems pretty essential.
“We’re battling a new environment, which means everyone involved in a transaction has to be educated,” he said.