Obtaining a mortgage to buy a new home or even refinancing your old home is not as easy right now as it used to be. The current housing market has made things very unpredictable and lenders are much more skittish about giving loans. Lending standards have increased and the lenders are extremely cautious about the amount of risk they might be willing to undertake. You may have relatively good credit and you still may have trouble getting a new mortgage.
Lenders have always had certain guidelines to determine to whom and how much money they were willing to lend. Many of these guidelines are set forth from the secondary markets, such as Freddie Mac and Fannie Mae. However, most lenders will also include their own underwriting standards and usually these are much more strict. You may have a high enough credit score to qualify under the conventional or government guidelines yet still not be able to get the loan due to your lenders stricter standards.
When you qualify for a mortgage, the lender will take a close look at your credit rating, your income, your debt to income ratios and your overall ability to repay the mortgage. Prior to the subprime meltdown and the dip in the housing market, you have access to a no documentation loan that did not require proof of income. At the moment however, those loans aren't available as most lenders have increased their standards. The easy loans can be a thing of the past. However, for those who have a large down payment that will always enable you to qualify because the loan to value goes down and your loan is more attractive for the lenders.
If you're turned down because of your low credit score you can find out what is necessary to ensure that you to qualify. If your score is just barely low, it may be possible to contact another lender which has a lower standard and get the loan. You do need to be mindful, however, when you're shopping for lenders because if all of them runs a credit report your credit rating will take a hit because it goes down with every inquiry.
If you are shopping for a mortgage it might be wise to call around and ask specifically about their underwriting standards. They should be able to tell you the credit score that they require and you ought to already know what your credit rating is. If you don't you need to get your free copy of your credit report and pay the $15.00 fee to get your credit score so you know exactly where you stand.
If your credit score is just a little bit too low you could test to do a rapid rescore with the credit bureaus. When there is something that is showing on your report that is inaccurate and you have documentation you can contact the credit bureaus directly and ask for a rapid rescore. This method can also be used in the case of paying down the balance on an existing loan or paying it off completely. With a rapid rescore you must be able to get the creditors to report and update the information on your credit report in a timely manner and there's a possibility that you could raise your credit score.
Before you go shopping for a house and a mortgage make sure that you are comfortable with your potential lender's guidelines and how high your credit score must be to ensure that you to qualify. Then you can certainly take certain steps such as paying down or paying off your balances or even acquiring additional credit so that you can raise your debt to available credit ratios.
You may also want to consider contacting a reliable and established credit repair service that has a strong knowledge of the things you can do to increase your score in a rapid yet positive and productive manner. Getting educated about mortgages and home financing and doing whatever you can to increase your credit scores will greatly serve you in this ever-changing and unpredictable housing market.
Lenders have always had certain guidelines to determine to whom and how much money they were willing to lend. Many of these guidelines are set forth from the secondary markets, such as Freddie Mac and Fannie Mae. However, most lenders will also include their own underwriting standards and usually these are much more strict. You may have a high enough credit score to qualify under the conventional or government guidelines yet still not be able to get the loan due to your lenders stricter standards.
When you qualify for a mortgage, the lender will take a close look at your credit rating, your income, your debt to income ratios and your overall ability to repay the mortgage. Prior to the subprime meltdown and the dip in the housing market, you have access to a no documentation loan that did not require proof of income. At the moment however, those loans aren't available as most lenders have increased their standards. The easy loans can be a thing of the past. However, for those who have a large down payment that will always enable you to qualify because the loan to value goes down and your loan is more attractive for the lenders.
If you're turned down because of your low credit score you can find out what is necessary to ensure that you to qualify. If your score is just barely low, it may be possible to contact another lender which has a lower standard and get the loan. You do need to be mindful, however, when you're shopping for lenders because if all of them runs a credit report your credit rating will take a hit because it goes down with every inquiry.
If you are shopping for a mortgage it might be wise to call around and ask specifically about their underwriting standards. They should be able to tell you the credit score that they require and you ought to already know what your credit rating is. If you don't you need to get your free copy of your credit report and pay the $15.00 fee to get your credit score so you know exactly where you stand.
If your credit score is just a little bit too low you could test to do a rapid rescore with the credit bureaus. When there is something that is showing on your report that is inaccurate and you have documentation you can contact the credit bureaus directly and ask for a rapid rescore. This method can also be used in the case of paying down the balance on an existing loan or paying it off completely. With a rapid rescore you must be able to get the creditors to report and update the information on your credit report in a timely manner and there's a possibility that you could raise your credit score.
Before you go shopping for a house and a mortgage make sure that you are comfortable with your potential lender's guidelines and how high your credit score must be to ensure that you to qualify. Then you can certainly take certain steps such as paying down or paying off your balances or even acquiring additional credit so that you can raise your debt to available credit ratios.
You may also want to consider contacting a reliable and established credit repair service that has a strong knowledge of the things you can do to increase your score in a rapid yet positive and productive manner. Getting educated about mortgages and home financing and doing whatever you can to increase your credit scores will greatly serve you in this ever-changing and unpredictable housing market.
About the Author:
Yes it's true about the crazy credit catch 22, the actual lost your wallet forgot your purse will set you back money for anybody who is not really careful.
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