What is up with getting a loan?

September 15, 2010

I’ve heard it quoted all over the internets that Housing is what brought us out of The Great Depression and other Recessions, but why is it that Housing is so sluggish?  Well, it’s not housing that’s sluggish, it’s lending.  The potential buyers that walk through my model home doors today are facing the strictest lending laws I’ve seen since I got into home sales.  I see several people a week who desperately want to buy a home and take advantage of all the benefits available to home owners, but they can’t get approved.  Why can’t they you ask?  Well, it’s not all “Bad Credit” as you might think.  I hear one of our salespeople every week mention someone with 780 credit score, who makes 90,000 a year who can’t get a loan on a $120,000 home.  WHAT?  Yes.  Commissioned Salespeople and Self-Employed with good credit are pretty stuck.  FHA guidelines were written with a very specific box in mind.  And when they were written the lending market was very wary of self employed and 100% commissioned folks.  All of those people with potentially variable incomes are some of the people with good credit who can’t get a loan these days.  What’s ironic about all of this is that with the economic weirdness that has been happening, a lot of smart people who find themselves out of a job decide that they have a lot to offer and go into business for themselves.  Entrepreneurship always increases in times of economic instability and that gives rise to the next strong economy.  Well, we might not have that very soon until lending laws loosen up a bit. UPDATE 12/13/10 I said it weeks ago and the Wall Street Journal is chiming in!
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