In the last few years, mortgage rates have been rocky and the entire housing market has suffered several blows. Borrowers were defaulting more than ever on their mortgage payments and consumers really began to worry about homeownership feasibility.
Today, the mortgage rates are actually at their lowest than they have been for the past 60 years. While that may be great news for those looking to buy or refinance their house, the reality is that many of the loan applicants will not qualify for the financing.
Credit scores are one of the primary reasons applicants are not qualifying for home loans. Lenders have had to tighten their lending standards in order to prevent the risk of default and as a result, those with low credit scores who have not worked through the credit repair process will likely not meet the more stringent lending requirements.
Credit scores have been on the downward slide for many in the nation who can not pay their bills on time and have been maxing out their lines of credit. Down payments are also a problem for many perspective homeowners who can not afford to save up 20% of the home’s purchase prices.
As for refinancing, due to the value dropping on homes these days, there is disappearing equity leaving existing homeowners unable to get approved for the refinancing they need to cash in on lower rates and have lower monthly notes.
Those considering a first mortgage are cautioned about applying for loans without first repairing their own credit standings. Experts say all consumers have the power to repair damaged credit but it takes time and consistency to rebuild credit scores acceptable to lenders. Even the programs offered by state and local governments are changing their requirements for credit scores and down payment cash paid up front before they are willing to back the loan or provide the funds necessary for a home purchase.
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