Can you qualify one day and not the next?

The short answer is yes and here is just one example of how that can happen.

Economists have called for the government to push rates even lower to ease the housing crisis but in the end, none of that will matter if the banks keep adjusting their own internal guidelines and making it tougher to qualify. 

As an example, over the past few months, I have seen banks set their own internal lending guidelines higher and higher with regards to credit scores.  It was not to long ago when a buyer with a 580 credit score could get an FHA loan.  Then we watched the minimum credit score requirements raise to 600 and then 620 and now many banks want a 640 credit score as a minimum.  

I have no issue with the banks setting their own guidelines that are more restrictive in order to have a better qualified buyer, but credit scores are reactive to many things that are sometimes outside the control of a borrower. 

An example:  I recently watched a qualified buyer get knocked out of the ability to purchase when their credit score went down. 

Why did the credit score go down? 

Well it turns out that this person had four credit cards.  They were always paid on time and were not even close to being maxed.  While they were looking for the home of their dreams and shopping for the deal they wanted, the credit card companies decided that they were not as good of a risk as they were in the past.  The card companies lowered the credit limits on their cards to just slightly over what the balance was on their cards.  Now it appears that the borrowers are maxed on their credit cards, which is a bad thing, and this has caused their credit scores to drop like a rock. 

By no fault of their own, their credit scores sank because the credit scoring model can't take into account the reason why suddenly their cards look as if their maxed.  It does not know or calculate that this was because the banks issuing the cards reduced the borrowers credit line.  The model, only knows that the amount of debt, the balance, is now close to the approved limit making it look as if they are over their heads which has dragged their score down to a level that they no longer qualify.

The point to all this is that while the "economists" may feel that low rates will help.  They are obviously not aware of the requirements to get a mortgage.  The interest rate could be 0% but if you cant get the loan, then it will not help.

By they way, I am seeing this happen every day.  The example above is real world and if it does not knock out the buyer from qualifying, then the adjustments to the base rate for the "risk based pricing" the mortgage companies are using, ends up driving the rate up far from what was advertised by the bank or posted on their rate sheet that day.

The point of all this is that yes you can be qualified one day and then no longer qualify the next. 

If you are thinking of buying a home, you may want to speak to a mortgage professional who can inform you about recent lending guideline changes and your specific credit profile. 

Every customer who has ever delayed their purchase, only to find out they were no longer qualified, said they would have made a move sooner and purchased if they had only known the risks of waiting.

If you have questions about this or any other topic, please contact me.

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