Credit Scores and How They Can Affect Your Mortgage Application
Right now the housing and mortgage market is unpredictable.
Even if you have perfect credit you may find it difficult to refinance your current mortgage or get a new mortgage loan if only because of the falling real estate market.
Lenders these days are being much more cautious about their lending standards and the level of credit risk that they are willing to undertake.
Lenders have specific guidelines that they follow in order to determine to whom and how much money they will lend.
These guidelines come from the secondary market, for example Fannie Mae and Freddie Mac but the majority of lenders also have their own in house standards.
While it is possible that your credit score is high enough to meet the typical standards for a conventional or government loan, you may still not be able to qualify because your lender may have a stricter standard.
The lender will evaluate your credit score, you income, your debt to income ratios and your overall ability to repay a mortgage.
In recent years, most banks have raised their standards and the no-documentation; no proof of income loans are probably a thing of the past.
Of course, a large down payment can often make a difference in how much home you can qualify for and if you can qualify at all because the loan to value goes down as the down payment goes up.
If your credit score is too low for you to qualify with a specific lender, you can take some steps to research what you can do to get a mortgage loan.
It may be as easy as shopping around with other lenders until you find one that will accept you.
However, you need to realize that every lender that you contact will run a credit report on you and your credit score will go down with every inquiry.
If you are shopping for a mortgage it may 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 should already know what your credit score 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 try to do a rapid rescore with the credit bureaus.
If there is something that is showing on your report that is inaccurate and you have documentation you can contact the credit bureaus directly and request 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 entirely.
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 is a possibility that you could raise your credit score.
Before you shop for a house and a mortgage make sure that you are well aware of your potential lender's guidelines and how high your credit score must be in order for you to qualify.
Then you can take definite steps such as paying down or paying off your balances or even acquiring additional credit in order to raise your debt to available credit ratios.
It may also be a good idea to contact a legitimate and reliable credit repair service company that is well versed in the actual laws that pertain to what you can do to actually increase your credit score in a positive and productive manner.
Getting your credit score increased as much as possible and getting educated on mortgages and home financing will help you in this current and ever-changing housing market.
Even if you have perfect credit you may find it difficult to refinance your current mortgage or get a new mortgage loan if only because of the falling real estate market.
Lenders these days are being much more cautious about their lending standards and the level of credit risk that they are willing to undertake.
Lenders have specific guidelines that they follow in order to determine to whom and how much money they will lend.
These guidelines come from the secondary market, for example Fannie Mae and Freddie Mac but the majority of lenders also have their own in house standards.
While it is possible that your credit score is high enough to meet the typical standards for a conventional or government loan, you may still not be able to qualify because your lender may have a stricter standard.
The lender will evaluate your credit score, you income, your debt to income ratios and your overall ability to repay a mortgage.
In recent years, most banks have raised their standards and the no-documentation; no proof of income loans are probably a thing of the past.
Of course, a large down payment can often make a difference in how much home you can qualify for and if you can qualify at all because the loan to value goes down as the down payment goes up.
If your credit score is too low for you to qualify with a specific lender, you can take some steps to research what you can do to get a mortgage loan.
It may be as easy as shopping around with other lenders until you find one that will accept you.
However, you need to realize that every lender that you contact will run a credit report on you and your credit score will go down with every inquiry.
If you are shopping for a mortgage it may 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 should already know what your credit score 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 try to do a rapid rescore with the credit bureaus.
If there is something that is showing on your report that is inaccurate and you have documentation you can contact the credit bureaus directly and request 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 entirely.
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 is a possibility that you could raise your credit score.
Before you shop for a house and a mortgage make sure that you are well aware of your potential lender's guidelines and how high your credit score must be in order for you to qualify.
Then you can take definite steps such as paying down or paying off your balances or even acquiring additional credit in order to raise your debt to available credit ratios.
It may also be a good idea to contact a legitimate and reliable credit repair service company that is well versed in the actual laws that pertain to what you can do to actually increase your credit score in a positive and productive manner.
Getting your credit score increased as much as possible and getting educated on mortgages and home financing will help you in this current and ever-changing housing market.
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