Mortgage standards and the housing market

Suzy Khimm asks whether credit worthy Americans are having trouble getting a mortgage? A bit of a personal follow up to this long term care story, with some comments about the housing and mortgage markets in Durham, N.C.

  • Next week we are closing on and moving into a house that can accommodate my family (wife and 3 kids) and mother-in-law. We had some very specific criteria in terms of layout (needed mother in law suite/apartment) and no flexibility in terms of school district.
  • We identified 5 houses that fit our criteria; all of them were empty* and one was in foreclosure. I priced having a comparable new home built and it would have cost ~30-40% more than what we ended up paying for a ~ 10 year old house. Interestingly, the contractor that I talked with about building me a house told me he got his first straight custom build contract in 2 years last week (though he has had major amounts of renovation work the past 9 months).
  • We had a very good credit score, and were able to pick among multiple 30 year fixed mortgage rate loans of between 3.5-3.875% (with differing closing costs, points). My first mortgage in the 1990s was 8% fixed.
  • The degree of documentation required to track the liquidation of money from a brokerage account into a savings to close the sale was much more involved than either of the two times I have gotten a mortgage in the past. I would say that it has been around 10 times as hard to comply with the information required (documentation, how specific it had to be formatted) to get a mortgage this time as compared to 6 years ago when we last got one.

It may have been too easy before, maybe it is too hard now. The Goldilocks principle (“juuussst riiiiight”) is hard to achieve.

DT

*This rate is high above the national 14% of home unoccupied and high above the local rate. Not sure why all the ones we considered were unoccupied.

About Don Taylor
Professor of Public Policy at Duke University (with appointments in Business, Nursing, Community and Family Medicine, and the Duke Clinical Research Institute). I am one of the founding faculty of the Margolis Center for Health Policy, and currently serve as Chair of Duke's University Priorities Committee (UPC). My research focuses on improving care for persons who are dying, and I am co-PI of a CMMI award in Community Based Palliative Care. I teach both undergrads and grad students at Duke. On twitter @donaldhtaylorjr

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