Getting a mortgage to buy a new home or even refinancing your old home is not as easy right now as it was once. 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 exceptionally 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 specific guidelines to determine to whom and how much cash they were willing to lend. Several guidelines are set forth from the secondary markets, such as Freddie Mac and Fannie Mae. However, most lenders will also incorporate 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 obtain the loan because of your lenders stricter standards.
When you qualify for a mortgage, the lender will take a close look at your credit score, 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 this time however, those loans are no longer available as most lenders have increased their standards. The easy loans may be a subject put to rest. However, if you 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 discover that your credit rating is to low to qualify with a specific lender you should discover what is necessary for you to qualify. If your score is close, the answer may be as simple as getting a different lender. You need to realize, however, that every mortgage lender that you contact could possibly run a credit report and every single inquiry on your credit report will further decrease your score.
If you are looking for a mortgage it might be wise to call around and ask specifically about their underwriting standards. They should be able to tell you your credit rating that they require and you should already know what your credit score is. If you don't you have to get your free copy of your credit report and pay the $15.00 fee to get your credit rating so you know exactly where you stand.
If your credit rating is just a little bit too low you could try 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 regarding paying down the balance on an existing loan or paying it off completely. With a rapid rescore you must be capable of getting the creditors to report and update the information on your credit report on time and there's a possibility you could raise your credit rating.
Before you shop for a house and a mortgage ensure that you are comfortable with your potential lender's guidelines and how high your credit rating must be to ensure that you to qualify. Then you can take definite 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 can also be helpful for you to contact an established credit repair service company that has experience in helping people raise their credit scores rapidly but in a positive and completely legal manner. Learning about mortgages and home financing before you apply and doing whatever you can to raise your credit score can help you greatly in this continuously changing and unpredictable housing market.
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