If you have damaged credit and have been patiently waiting for an improvement in the mortgage market before applying for a home loan, now may be the right time to act on plans to begin the home mortgage process. After the economic crash in 2008, the mortgage lending guidelines tightened considerably in the United States. While interest rates plunged to near record lows that held steady in 2008, 2009 and beyond, mortgage lending guidelines were so tight that many people could not qualify for a mortgage.
A Closer Look at the Mortgage Industry Today
Over the past few months, residential mortgage rates for a 30-year fixed rate mortgage have inched upward by approximately 0.75 percent. This trend is projected to continue in the coming year as the economy continues to improve. With this in mind, now may be a great time to lock in a still-low interest rate. More than that, the number of mortgage defaults over the last four months of 2016 have declined slightly, indicating that the mortgage industry is strengthening. In addition, while lending parameters are still not as loose as they were in 2008, there are now more opportunities available for individuals with a blemished credit history.
Improving Your Credit Rating
While a blemished credit history may be acceptable with some lenders now, most lenders will still shy away from extending a loan to you if you have substantial issues with your credit. For example, if you have recent late payments on debt accounts, unpaid collection accounts and more, you may still find it challenging to get a loan.
It is wise to get your financial house in order before you apply for a mortgage. This means not only changing your practices in the future, but also finding a worthy credit repair solution to fix past mistakes. Establish a regular history of making payments on time to prove to a mortgage company that you are creditworthy. If you have outstanding collection accounts or other debts, pay these off. Bring all accounts to good standing.
Applying for a mortgage is the first step to take to living the American dream of being a homeowner. However, poor credit is a hurdle that many future homeowners must jump over before being approved for a mortgage. While it is now getting easier to qualify for a mortgage with blemished credit, some effort needs to be made to clean up a truly poor credit rating. By making the effort to do so starting today, you may soon find yourself getting the loan approval you desire.