Louisville, KY (WDRB News) -- Interest rates for home buyers remain low. But only highly qualified borrowers are applying for such financing.
Banks have plenty of money to lend, but government restrictions are so tight that they may be keeping people away who might qualify for a mortgage.
One reason -- the home building industry has had such a difficult time bouncing back is that while interest rates are low, too many consumers no longer meet the qualifications to get a mortgage.
"It is far too difficult to get a loan," says Tara Brinkmoeller of the Home Builders Association of Louisville.
According to the Federal Reserve, about 25 percent of the people who apply for a home loan these days are turned down.
"Three, four, or five years ago everybody could get a loan," says the president of Republic Bank Scott Trager. "They did not have to have any documentation and that was a farce, now that crisis has forced the pendulum to go the other way and now it is too tight."
On most loans, banks today want 20 percent down. Trager believes the tighter restrictions by federal regulators to discourage risky lending are discouraging some people from even applying who might actually meet the higher qualifications.
"There are a lot of programs we have, that the government has, so why not try?" asks Trager.
Trager agrees that the loan process can be intimidating. His best advice is that consumers should be prepared. He advises, "Make sure you have your pay stubs, your tax returns, your credit cards, your debts, the balances and who they are, account numbers, and all of the information on your income."
Trager is looking forward to the day the credit markets will loosen up a bit. "I am hoping that by the end of 2012," he says, "or the beginning of 2013, that we will see the requirements reduced and loosened up."
Trager says his bank is developing an online site where consumers could apply for home loans in an effort to take some of the hassle out of the mortgage application process.
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