Acquiring A Home Loan Demands A Good Credit Record

Acquiring A Home Loan Demands A Good Credit Record

If you are out to buy a new home or refinance your old home you might have noticed how unpredictable the housing and mortgage market is right now. Lenders are being much more cautious with their lending standards and they are being very careful about the levels of credit risk that they're willing to take. Even with perfect credit you might have found that refinancing your home or applying for a new mortgage is more challenging than ever.

Lenders have specific guidelines that they follow in order to determine to whom and how much cash they will lend. These guidelines come from the secondary market, for example Fannie Mae and Freddie Mac but nearly all lenders also have their own in house standards. While it is possible that your credit rating is high enough to meet the regular standards for a conventional or government loan, you may still be unable to qualify because your lender may have a stricter standard.

In order to qualify the lender will look at your credit rating, your income, your debt to income ratios and your overall ability to repay the mortgage. Before the housing market crash and subprime meltdown, no documentation nor proof of income loans were common, however, lately the banks have increased their standards and these kinds of loans are probably a thing of the past. A big down payment can often enable you to qualify though because the loan to value ratio of your loan becomes more attractive.

If you discover that your credit score is to low to qualify with a specific lender you should find out what is necessary that you should qualify. If your score is close, the answer may be as easy as searching for a different lender. You do need to realize, however, that every mortgage lender that you contact could feasibly run a credit report and every single inquiry on your credit report will further lower your score.

If you're shopping for a mortgage it may be wise to call around and ask specifically about their underwriting standards. They will 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 lower than it needs to be you can try a few things. If there are things on your credit report that are erroneous and you have the documentation to prove it you can often petition the credit bureaus for a rapid rescore. You may also use this method if you pay your debts down or pay them off. You just need to ensure that the creditors have updated the information and then request the rapid rescore with the credit bureaus. You may be able to increase your credit rating.

Before you go shopping for a house and a mortgage make sure that you are well aware of your potential lender's guidelines and how high your credit rating must be to ensure that you to qualify. Then you can take certain steps such as paying down or paying off your balances or even obtaining additional credit in order to raise your debt to available credit ratios.

It's also possible to consider contacting a reliable and legitimate credit repair service which 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.

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