People With Good and Bad Credit Find It Tougher to Obtain Mortgages
By Francine L. HuffMortgage Credit Problems Columnist
Consumers with bad credit
aren't the only ones having trouble qualifying for a mortgage. Lenders are
getting tough with approving conventional loans even for those who have good credit.
That's not only due to the foreclosure numbers -- which rose 57% to 233,001 in
January 2008 from a year earlier, according to RealtyTrac--but also because
investors are moving away from mortgage-backed securities sponsored by Fannie
Mae and Freddie Mac that have helped boost the real-estate market.
Qualifying for a Mortgage
"Even if you have good credit, you don't know if they
are going to give you a loan or not," Joseph Mason, a senior fellow at the
Wharton School of the University of Pennsylvania, told CNN/Money. Wholesale
Access, a mortgage research firm, claims that 30% to 40% of borrowers who could
have qualified for a conventional mortgage a year ago are now unable to.
Less Mortgage Money
Available
Financing mortgages has gotten more expensive, and as a
result there will be less money available to underwrite mortgages for home
buyers. And if people with good credit are finding it tough to get approved, it's
going to be even more difficult for those with bad credit to obtain loans.
Bad Credit Means You'll
Pay More
To get the best interest rates on loans, some lenders are
requiring people to have higher credit scores than in the past. Those with bad
credit may not qualify for a loan at all, or may be asked to make a larger down
payment. Even people with a stable employment history or decent income may not
qualify for the best interest rates if they don't have a large down payment.
Clean Up Bad Credit
Those who have bad credit and want to obtain a mortgage will
have to work hard to boost their credit scores. Establishing a history of
paying bills on time, paying down debts, and avoiding new credit lines will
help to boost a person's credit score. It's a tough real estate market, but
that doesn't mean people with bad credit should give up hope of obtaining a mortgage.
Online loan shopping can help people with bad credit find lenders to assess their
situation and help them figure out exactly what they need to do to obtain a mortgage.
Source
CNNMoney
About the Author
Francine L. Huff is a
freelance journalist and the author of The
25-Day Money Makeover for Women. She
has appeared on a variety of TV and radio shows.
About the Author
Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.
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