In the past, lenders would offer the same rates to anyone with credit scores in the upper ranges, but that's changing, says Jack Guttentag, professor emeritus of finance at The Wharton School of the University of Pennsylvania. Lenders are differentiating between buyers who have a 760 FICO score and those who have a 780 -- all the way up to 800, he says. "That's a big shift."
Buyers aren't the only ones under the microscope. The home must pass muster, too. Dick Gaylord, immediate past president of the NAR, remembers one home where the buyer had to wait "a little longer to get the loan" after the lender ordered a fresh home appraisal.
These days, lenders are "taking their time," Gaylord says.
Buyers can be choosyBuyers have a lot of selection. Consequently, they can be choosier. Homes with eye and price appeal will draw activity, says Dorcas Helfant-Browning, chief executive of Virginia Beach-based Coldwell Banker Professional, Realtors.
Conversely, "fixer-uppers are a tough sell," says Ron Phipps, broker/Realtor with Phipps Realty in Warwick, R.I. "The issue is you can buy a really fine home in great condition for the same price."
And the transition from homeowner to home seller is a mental adjustment. "Sellers, in a lot of cases, have not come to grips with the fact that their houses have dropped in value," says Glen Lazovick, chief sales and business officer for Mid-Atlantic Federal Credit Union. "If you don't have to sell, now is not the time to sell. If you want to sell your house, it has to be priced well and look great."
Buyers also are looking beyond the closing table, Phipps says. "People want to know what the utility cost is, what the insurance is, what the flood insurance is. People want to know what the real cost of ownership of the home is."
Trying to time the marketThese are unusal times for buyers and sellers.
Today, you find extremely motivated sellers facing foreclosures and short sales. At the same time, "a number of markets are heating up," becoming attractive to investors and first-time buyers, says Nic Retsinas, director of the Joint Center for Housing Studies at Harvard University.
But the traditional market of willing buyers and sellers is still stalled, "and I suspect it will be stalled until we get some sense that the real economy is starting" to recover, Retsinas says.
For those who want to buy, most housing experts are singing the same song: Clean up your credit, save your money, shop for a mortgage and get preapproved. And while trying to time the market's rock bottom is impossible, trying to lock in a low interest rate is smart, says Gaylord.
Gaylord advises clients to shop around and put in multiple mortgage applications. "If one lender can't help you, there are 50 others to look at and talk with," he says.