Apply Now For Your Next Mortgage
Mortgage lenders tightened their fists after the recession, but it’s still possible for young buyers to get approved for a mortgage. What you need to know.
As the U.S. economy continues to rebuild from the recession that was almost nine years ago, lots of people are looking to buy homes after years of renting or staying put in a previous house. As a result, the real estate market is competitive in many parts of the country, requiring buyers to put in aggressive offers and, in some places, compete with deep-pocketed investors paying cash.
What this means is that—now more than ever—you need to be qualified for a mortgage before you shop for real estate.
Understanding today’s mortgage market
Before the housing crisis of 2008–09, it seemed that anybody with a pulse could get a mortgage (or two or three). Lenders pushed “sub-prime” loans on people with poor credit knowing the entire time that the applicants couldn’t afford the payments and would eventually default.
These lending habits were obviously unsustainable, and we know the rest of the story. The banks got bailouts while millions of homeowners either lost their homes or got stuck underwater, owing much more on their mortgage than their home was worth.
Even as the real estate market begins to recover, the mortgage crisis has left its mark. Mortgage underwriting—the criteria banks use to determine whether to make a loan—is more stringent. That’s not to say that young couples or other first-time home buyers will have a difficult time getting a mortgage. But it means that proving to the bank that you’re financially prepared for a mortgage is more important than ever.