Since the massive housing boom crash in late 2007, there have been some updates regarding loans and eligibility. The primary culprit of the crash was from over inflated home prices and sub prime lending. Sub prime lending is a home loan that is provided to a lender that does not meet the high standards for a standard FHA loan based on credit score and income. The sub prime market began offering loans to people without running credit, called income qualifying. This means that if a borrower was able to prove their income was enough for a certain loan amount, they did not have to have their credit report run to see if they were reliable and for other debts. The next sub prime blunder was credit qualifying. The purpose behind this type of loan was to qualify borrowers based on credit and nothing else. There was not income verification that took place.
Finally, the inflation of home prices was so bad that home were doubling in value within six months, and money was changing a lot of hands. This all aided to a crash that has completely paralyzed the real estate market. The encouraging aspect to all of this is ultimately smart lending and smart borrowing. Today, there are signs of life in the market, and buyers are preparing to purchase home while they focus on getting their credit cleaned up, and saving for a down payment. This means that when buyers purchase home, lenders are being responsible to make sure that there will not be a foreclosure in the immanent future. Foreclosures are still a common occurrence, but it seems to be the last growing pain before the market completely stabilizes for good. Some experts think the entire process can take another 18 months.