Can’t get a mortgage for that new beautiful house you saw the other day? Well, you are not the only one who is going through this. A recent survey indicates a large number of people are experiencing similar problems when they try to get their loans approved.
When the housing market collapsed in 2008, the lending rules changed. As new policies were adopted, people had their applications rejected, including the wealthy.
In the past, mortgages have paved the way for tight situations for lenders, the effects of which they can feel even today. As such, they are now somewhat reluctant to offer any loans. Consider regions where homes are sold in the range between $5 million and $10 million. Houses are being sold in large numbers, but mortgages are also frequently rejected.
Previously, high end deals were easily closed without many discussions or negotiations. But this has now changed, and loans are approved only after thorough consideration. Because of this, many wealthy people have had their applications turned down even though just a few years ago, they would have easily made it through.
In the next few years, there is a possibility that the rules will get even stricter, and more applications will be discarded. In Washington DC, a lot of proposals are being made that suggest that a percentage of the total income should be considered when borrowing. If this were to be implemented, it would affect everyone, but people with low income brackets and first time home buyers will suffer the most. Even now, they find it difficult to manage mortgage finances, but later on, it would be even tougher.
There are quite a few individuals who have assets worth over a million dollars and have good credit scores as well but even today, they have a high chance of their applications being rejected.
Tyler Vernon, who works for the Biltmore Capital Advisors, stated that there are a lot of people who can get their first mortgages approved. Problems start when they want a second mortgage or want to refinance their current ones.
As of now, income may not be that significant a factor. But if the rates rise, it probably will be, and retirees will be affected the most.
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