A good agent knows that any home buying process doesn't begin with scoping out neighborhoods or searching online for open houses.It starts with a trip to the bank to get pre-qualified for a loan.
But in the midst of the chaotic economic downturn, such pre-qualification has gotten pretty prickly, with banks now necessitating a perfect credit rating and ties to royalty just to be seen.
Consider the case of the Britos, a San Francisco couple who pre-qualified for a $650,000 home loan in 2006 and who now only pre-qualify for $280,000.
As the article points out, the receding loan amount is maybe a bit of an over-correction in the market.
Still, at its peak, the ratio of borrowing leverage for states most affected by the housing crash (think Arizona, Florida, and California) were as high as 15 times a borrower's income. Talk about risky.
During the housing boom, the old standby of "your house should be no more than three times your salary" went out the door, replaced by "get as much as you can and then buy more than you need."
And we're all see the effects of that logic.
What do you think? Would you rather have people qualify for less or more?
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