Why is getting a loan so jolly hard these days?

It seems that everyday word comes down from the investors about one more thing that's going to make life more difficult for a borrower. As if it isn't hard enough already. Guidelines change with out much notice. Some of them make sense, some seem a little too conservative.

The latest is the "walls in" policy now being required for all condominiums whose master policy does not provide this coverage. Furthermore, the lender will collect it as part of the escrow payments so it has to be included as part of the borrower's debt structure.



What does this mean? It is an insurance policy, somewhat similar to a renters policy, that covers the internal rebuilding of a condo or town home if the property were to burn to the ground. Typically the HOA's insurance will rebuild the basic structure, but not finish the inside (drywall, bathrooms, kitchen).



So the down side is that a borrower who is a little tight on the mortgage payment, now has to include the insurance policy too. This could prevent them from qualifying. On the upside, it's smart to have the insurance. Let's face it, if the building was to burn down, it would be tough to come up with the money to finish the interior. So all in all, forewarned is forearmed, and with this knowledge a homebuyer can remain within their purchasing power and not have a nasty shock half way through the transaction.