Housing prices are a record low. The market is flooded with short sale and foreclosed homes ripe for the picking. So why aren’t you buying a house? Many Americans want to take advantage of the buyers market, but find it difficult to get a home loan. Here are three reasons obtaining a home loan this year will be tricky, and ways you can overcome the challenges.

History repeats itself:  Lenders such as Fannie Mae and Freddy Mac are tightening the financing belt and major lenders such as Bank of America and Wells Fargo are following suit. During the housing boom, lenders were passing out home loans like candy on Halloween, but many homeowners were not qualified or embraced ARM loans that later came back to haunt them. Today, lenders don’t want a repeat of the housing bust that has landed our economy is such financial turmoil. They’re cleaning up the mess of the mortgage crisis and as a result have upped their standards on obtaining a loan.

Give me a little credit:  These days, if you don’t have a stellar credit score, don’t be surprised if you receive a rejection letter in the mail. Lender’s more stringent standards have made it so that good buyers with decent credit are still being turned down for financing. During the housing boom, your FICO score didn’t have to power to make or break a deal, but now, it could be the only thing standing between you and your dream house! Make sure to have a recent copy of your credit report to dispute any errors, pay off delinquent debts, and maintain revolving credit to best boost your chances for a loan.

No money, no way:  If you don’t have a down payment, lenders are turning potential homebuyers away. During the housing boom there were “no-money down” programs for homebuyers that allowed easy financing, but today those programs are long gone. Lenders now require at least a five percent down payment. So if you’re planning on becoming a new homeowner be prepared to dip into your savings to cover the down payment and possibly closing costs.

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This is filed under Home Loans/ Mortgages.

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