Change is Coming! Don't be Suprised!

In the mortgage world it seems that change is part of our everyday life especially in these times. Many times the changes are minor yet tedious and others have been very major and altering to the loan process. The latest change that seems to be taking place at most of the investors that I have been in contact with including our mortgage banking operation is the minimum credit score for an FHA loan is going up yet again. Travel back a couple of years ago and we have moved from No credit score requirements to 500 to 540 to 580 to 600 to 620 and now it is a minimum middle score of 640. So what does this truly mean for the average person that had a 620 credit score. It has been my experience when looking and analyzing individuals credit reports that this will not make a difference for the vast majority of home loan applicants. Someone that has a 620 score can generally pay a revolving account down or take care of a bad account and see a 20 point increase in the matter of 1 month. That being said there are also still ways to do a re-score of the credit report in 72 hours which I have utilized for clients in the past. This change will not make as big of a difference as most might think. It seems as though mortgage loan originators and real estate agents alike have grown accustomed to complaining about any changes to loan guidelines. That being said let's take a step back and look at it with a different point of view...
Without these changes we will see more foreclosures in the future or so the studies have proven. That being said with more foreclosures in a neighborhood we are seeing diminishing or stagnant property values due to these homes being in poor condition or with lower sales prices. The lower sales prices are coming from the banks dumping these assets. As a homeowner or potential homeowner it may be a little more difficult to get a home loan but these increased requirements will have a lasting effect on the overall housing market in a positive way. People that purchase a home are less likely to foreclose which brings stability to your neighborhood. Isn't that we are all fighting for is a stable home market?
It is my opinion that these changes will not hinder someone with a 620ish credit score from purchasing a home if they get in contact with a good mortgage professional and a savvy real estate professional. With the help of both they can still achieve the dream of home ownership with historically low interest rates and remarkable deals on current home prices.
If you are a real estate or mortgage professional ask yourself... Do you want stability in the housing market for years to come? Is this your career or is it a job? A career is a passion and purpose everyday with meaningful value. A job is a 9-5 with tasks yet no purpose long term and a job ends with instability... Instability in the market puts our long term careers in jeopardy because of people fighting for a job...