New Credit Score Threshold-620
HOME LOANS, TIPS FOR BUYERS
October 23rd, 2009
Fannie Mae is once again setting the ground rules for mortgages they will purchase from lenders and starting in a few weeks, borrowers better have a credit score at or above 620. This will apply to conventional loans as well as FHA and VA loans insured by the government. Additionally, if you want the best rate and terms, you’ll need a credit score around 720 or higher. This applies to purchases and refinances.
Gregory Karp, reporter for the Chicago Tribune, offered a few tips for borrowers:
- Avoid mortgage brokers unless you need “hand holding”. New appraisal rules make shopping a loan difficult for brokers plus there are additional fees to be paid for the broker’s services. The rule limiting mortgage brokers revolves around the appraisal-lenders can not accept an appraisal from commissioned brokers. Thus, a loan broker would have to order a new appraisal for every lender the loan is presented to. Costly and inefficient-according to the author.
- Shape up your credit. Getting a loan approved today is the most difficult its been in decades. Pay bills on time and pay off as much debt as possible. The formula for calculating credit scores is secret, but these two items account for the largest part of your credit score. He also recommends you not close old credit card accounts and keep your credit usage as small as possible. Check your credit report for errors at: www.annualcreditreport.com
- Apply for a fixed-rate mortgage-One of the main reasons for the real estate crash is the increased usage of adjustable rate loans. They were easier to get, but many borrowers ended up choking once the payments started adjusting leading to foreclosures. Fixed rate loans will not have payment variations due to interest rate changes.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
CORNER OF COURT AND PLACER IN REDDING
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
Fantastic read, thanks. It’s much clearer now what a credit report is truley about and how it is important. Even if you are not in debt, maintaining a well cared for credit score is vitally important.