I read an article yesterday about new lending requirements that JP Morgan were putting in place for their mortgage loans. The new requirements state that potential borrowers must have atleast a 700 credit score and a minimum of 20% of the purchase price for down payment. This raised a few eyebrows as many people in the mortgage industry didn't see this coming. What's also to be seen is if other large institutions will follow suit with their own lending guidelines for customers.
This has brought up talk that by doing this, the rental demand will stay high because less people will qualify for loans if this becomes a widespread guideline. Many Americans don't have $1,000 in savings, let alone 20% to put down on a house. Now before you discouraged, there are other options such as FHA loan which require only 3.5% down payment but have more stipulations than a conventional loan. Mortgage rates are at the lowest they have been over the last few years due to various economic policies we've seen over the last few months in response to the decline in the economy. The rates are also making the decision buy very attractive.
The unemployment numbers are steadily adding up week over week. If the housing market starts to see more and more foreclosures, this may cause home prices to drop a little if there is a large supply on the market. We are nowhere near the end of this pandemic but like my grandfather said, when your money is right, the deals will come.