Much of the housing news reported focuses on inventory and credit guidelines. In case you haven’t noticed housing inventory is low and credit guidelines are tight. These two headlines show up all the time and for good reason. In many markets they are both true.
With interest rates still low and home prices rising in a majority of markets many homeowners appear to be hanging on to their homes. This could be to try and time the sale of their home to coincide with a market peak or they realize that if they do sell their home for top dollar they will be turning around to buy in a market with scarce homes available and paying top dollar as well.
The gap between income and home affordability can be a hard one to bridge and for many potential home buyers it is out of reach due to increasing prices and a tight credit market.
One story I don’t see reported much is that lending volume is down considerably in 2017 and lenders are looking for ways to increase loan applications while not taking on too much risk. That line is not an easy one to draw so instead of re-writing guidelines or coming up with something altogether new lenders will typically enhance an existing guideline to cast a wider net in an effort to capture more potential borrowers.
Whenever I see a guideline upgrade come along that makes sense and which could help more than just a small percentage of people I like to highlight it. One guideline that has been around a while but recently enhanced is using assets for qualifying income.
We can now use any liquid account including retirement funds (provided the funds are vested and available for withdrawal prior to retirement).
For those in the work force liquid accounts add income to the income they are already earning which means it is a great way to boost purchase power without actually using the funds. In my experience this strategy triggers an average price increase of about $80,000.
By David Hughson
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