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National Credit Crunch?
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by: Dave Saltonstall
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Word Count: 362
Is the national credit crunch still an issue? Has government intervention solved this? With President-Elect Obama about to take office, have we reached the end of the recession?
Mortgage rates are at an unbelievably low level, and many homeowners are wondering if they should refinance. They all want to know if the credit markets have loosened up, and many are hoping to save a little month, or refinance a bad deal they made in the boom. The problem is, most houses have lost value, and those homeowners no longer have enough equity to qualify. Credit guidelines have also gotten stricter, making it harder to qualify for those great rates. Right now, even if you have ideal credit, a whole lot of equity left in your home, a high income, and financial stability, it’s still much harder to walk out of a bank with a new mortgage than just a year ago.
Let’s take an example. Imagine a couple, John and Jane, and they both make great salaries working for major corporations. They have great credit and they have paid off half of their house in an expensive suburb. They want a new £300,000 loan against a £600,000 appraisal. Two years ago, lenders would have fall all over themselves to give them money. Their lender is still going to hesitate.
Why? He’s worried one of them might get laid off. It’s not that that the bank is ready to say no, they will just stall. They’ll ask for more information on their jobs, on their employment history. Maybe even a letter from their employer about the likelihood of layoffs. Most people think it’s probably better that we’re back in a world where housing prices are reasonable and loans are given to good borrowers, but the pendulum has still swung too far in the other direction. Will the two people in his example still get a loan? Of course they will. They’re some of the best borrowers out there, and they can keep shopping around until someone gives them what they want. But ask yourself, are you doing as well as them? or does your debt-management need a helping hand?
About the Author
If your not as prolific as John and Jane above, don't despair, expert help is certainly out there, if you'd like to talk to someone about your home loan, borrowings or just seeking some unbiased debt-advise click onto debt-free.org.uk toady.
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