Over the last 18 months, the mortgage market has changed more rapidly than in any comparable period since the Great Depression of the 1930s. From the standpoint of borrowers, two changes are of paramount importance. The first is an increase in day-to-day price volatility, which I wrote about a few weeks ago. The second is a tightening of underwriting requirements, with higher down-payment requirements the centerpiece. That is the subject of this article. Underwriting requirements are the rules lenders impose to assure that loans will be paid off, and the down payment has always been the most important of them. The down payment is the difference between the lower of the sale price or property value, and the amount of the mortgage loan secured by the property. If you purchase a hous...
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