He’s middle-aged and between jobs. Hard to say if he’ll land a permanent gig at his age. He does have some income, but it’s reported on 1099s, which makes it historically unreliable and difficult to verify. Would you lend him over $600,000 to refinance his house?
Apparently not, since Ben Bernanke, former Chairman of the Federal Reserve, the man who reportedly now makes $250,000 per speech, just got turned down for a mortgage refi.
“I recently tried to refinance my mortgage and I was unsuccessful in doing so,” confessed Ben Bernanke, who lives in a Washington D.C. townhouse valued at close to $1,000,000.
The likely reason for the rejection? He was shopping for a jumbo loan, meaning one exceeding the conforming loan limit of $625,000 for the Washington, D.C. area. According to the Los Angeles Times, “a lender probably ran Bernanke’s request through one of the computerized screening programs common to the industry, which rejected him because he could no longer show two years of stable income from the same source.”
(By the way, don’t worry too much about Mr. Bernanke. Many other banks, who keep loans in their portfolio rather than package them for re-sale, would be ready and willing to lend to the former Fed Chair. Plus, his current career, as a speaker for hire, earns him “more in 40 minutes than he earned all last year at the Fed,” reports the L.A. Times.)
The moral of the story: Due to tight credit standards and very picky lenders, it can still be tough to get a mortgage, and that’s one factor holding back the housing market. On conventional mortgages, a credit score of 735 will normally get your mortgage approved, while a score of 720 – which still seems awfully good – might not cut it. Several clients are still experiencing difficulties with mortgages, especially when buying in condos where low emergency reserves or other issues affecting the entire building are scaring off lenders. If you’re planning on moving or refinancing, be patient, expect delays and snags, and be prepared to document income and bring more cash to the table if needed.