It’s still a great time to buy a home because mortgage rates remain at historic lows and because there are so many houses on the market. Yet, being approved for financing a mortgage is more difficult and takes longer than ever before

Rates currently below 4%

It’s a buyer’s market now more than it is a seller’s one. Thirty-year fixed rates hover around 4 percent while fifteen-year fixed rates are below 3.5 percent. Also, homeowners are more flexible on repairs, closing dates, and even the final sales prices. As a result, buyers are paying less, even for real estate in the best of locations

That is, they’re paying less when they get approved for a loan, which is more challenging than ever. The days of being able to merely show up and get approval are over

More requirements for documentation from buyers

Lenders continue to lend, but they’re more discerning than before. Borrowers must have solid credit and be able to pay the down payment. They must have a good ratio of income to debt. More paperwork is required to prove the income, and more patience is necessary to get everything verified. Borrowers must also have financial reserves and low credit card debt

To be fair, brokers say, these things were required during the housing boom last decade, but because the housing bubble grew to be so large, people stopped planning; their credit card debt skyrocketed and they carelessly spent their savings. Thus, when the bubble popped, borrowers got rocked

So many brokers offer the following suggestions for buyers to be aware of and prepare for when wanting to acquire a mortgage

Higher credit score requirements

First, a high credit score is paramount. Generally, buyers with a score of 740 or more are getting the best rates

Second, buyers should have a monthly debt of no more than 36 percent of their income per month. And in addition to needing to produce job income documentation, buyers should be able to show papers detailing every kind of income, from monthly or annual bonuses to inheritance gifts, no matter how small they might be. These kinds of incomes need to be verified

Another key is having something in the bank, so to speak. Lenders want to know whether or not buyers will be able to pay their mortgages for several months in the unfortunate event that they might lose their jobs

Brokers have begun to rely more on their relationships with loan officers than in the past. If buyers have questions about mortgages, payments, or rates, they need loan officers whom they trust to guide their clients in the right direction so that they make the best decisions. Furthermore, many brokers are making sure to develop and keep relationships with real estate attorneys in case there are legal issues

More patience required to close on a loan

More than anything, potential buyers are encouraged to be patient. The process takes longer than it used to be. No longer should buyers expect the process to be done in just two weeks. And they shouldn’t be surprised or offended if asked for more verification. Due to the bubble burst a few years ago, lenders are more cautious and taking greater care in lending money.