1. The increased scrutiny:
Little or no documentation are blamed for the current state of affairs and Lenders have taken the steps to remedy the situation. Those steps involve more disclosure from mortgage applicants: those who can prove their earnings, assets and employment history are better positioned to get an approval than those who rely on stated income programs.
2. Good Credit.
This is an area whose importance has become critical: with the exception of a few government insured programs such as FHA, the minimum credit score required is between 680 and 700. That range is higher than the previous 620 to 660.
Credit scores affect the interest rate and fees, they also have a direct impact on the percentage that can be borrowed against the property: your loan to value increases with your credit scores. This is also true with other consumer debt: the interest rate and credit card limit depend in large part on credit rating, i.e. scores. This also applies to commercial lending.
How to improve your credit scores:
a) Pay on time,
b) Do not co-sign,
c) Correct all mistakes you find in your report,
d) Keep your credit utilization at around 40% ($400 charge on $1,000 limit),e) Limit the number of credit inquiries from third parties( merchants, etc...).
3. Equity.
High inventory of unsold properties brings low prices, i.e. loss of equity. This in turn makes it difficult to refinance or to sell.
The difficulty in refinancing stems from the fact that Lenders have reduced the maximum loan to value and properties are loosing value in certain markets. According to recent statistics, properties values declined by up to 10%.
Lower valuations mean less flexibility for the sellers and the result may be prices that are set too high for the current market conditions.
Lenders are willing to extend credit to qualified applicants, your duty as a borrower is to be prepared in order to win the mortgage battles.
No comments:
Post a Comment