Wednesday, 14 May 2008
It wasn’t long ago when all you needed to get a mortgage was to be living. Not so today. The credit crunch is real and it has hit the mortgage market especially hard.
If you had a credit score of 680, you were considered a good risk for a conventional mortgage with the lowest interest rate. Today, your credit score needs to be above 720 in order to avoid additional fees that lenders are adding to their loans in the form of higher interest rates. And even a high score doesn’t guarantee that you will get the best rate. The location of the home you want to buy, the amount of your down payment, the total amount you own on credit are only a few of the underwriting criteria being scrutinized by lenders.
Because of the growing number of criteria that a lender uses to assess risk, interest rates will vary more greatly from mortgage broker to mortgage broker and from bank to bank. You will need to invest much more time shopping for a mortgage than in the past.
So if a new home is in your immediate future, you might want to get your credit house in order first. Start by getting a copy of your credit report from all three credit bureaus. The middle score of the three is what lenders use to qualify you as a borrower. If this score is below 720, you might want to think about ways to boost your middle score. CnnMoney offers some credit boosting tips.
With home prices falling in many markets across the country, now is a very good time to buy. First-time buyers or second-home buyers are sitting in a catbird seat because they don’t have a home to sell and can bargain for the best price. You’re in luck also if you’re being transferred by your employer that offers a home buy-out as part of the relocation package. If you have a home to sell, you may have to wait awhile.
In any case, always get your mortgage lined up before ever looking or a new home. There’s nothing worse that making an offer on a home only to discover that you don’t qualify for a loan.
Happy Savings,
Candee Lynn Wilson
The Saving Lady
www.101WaysToSaveMoney.com
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