Mortgage Lending NJ: How Your Credit Score Affects Your Chances For a Mortgage
Mortgage lenders in NJ carry a heavy burden when it comes to offering financing for homes in today market. If you likened the housing market in 2004 to a comparison of getting into college, then Harvard was taking just about anyone who signed their name to the SAT exam. As a result, maintaining this academic metaphor, countless students dropped out because the rigors of Ivy League education, and as a result, Harvard had to shut down since it couldn’t afford its projected budget. Okay, maybe the comparison was a bit of a stretch, but the point is that mortgage lending NJ has been almost completely revamped, licking it’s loss liquidated resources and learning the error of its earlier folly. As a result, mortgage lending NJ now weighs your credit score quite heavily when determining if they should loan hundreds of thousands of dollars.
Mortgage Lending NJ: But Isn’t a Buyers Market With All Those Homes Available Right Now?
It’s true that homes prices are at one of their lowest levels in many years, but mortgage lending NJ has not loosened despite the growing quantity of homes for sale. The reason is quite simple: mortgage lenders in NJ need assurance that you can pay your loan. In fact, according to CoreLogic, an organization that provides high-value information and analytics: 60% of conventional mortgages originated in 2010 had a credit score of at least 780; contrast that with 2005 when a mere 25% of new loans had credit scores at 780; and finally, buyers will need at least 20 percent down for home loans to get the best rates.
Mortgage Lending NJ: What About an FHA Loan?
Historically, the FHA loan option was available to provide potential buyers with an option whose score was low. Theoretically, the FHA will insure loans with a credit score of just 500, but the program is seriously reevaluating this risk with the record number of defaults, desperately trying to minimize taxpayer risk. In fact, the FHA is in a downsizing trend and is becoming much less giving with homebuyers who have poor credit ratings. To further raise the stakes, in 2010, greater than half of the FHA borrowers had a credit score of at least 680. Additionally, the FHA has increased the annual mortgage insurance premium (MIP) by another 0.25 percent this past April 2011. So what does this all mean: if you want the best mortgage possible from a mortgage lender in NJ, than maintain the highest credit score that you can.
Mortgage Lending NJ: Tips On How to Raise Your Credit Score
- Pay your bills on time, and if possible, in full.
- Reduce credit debt and increase available credit balances.
- Keep credit accounts open – especially if you have a history of paying that particular bill on time – have a lengthy history with a creditor tips off mortgage lenders in NJ that you can manage payments over time.
- Try not to open too many new credit accounts.
- Try and maintain a variety of credit – for example, mortgage lenders in NJ like the credit that consists of installment loans, revolving loans, and open credit cards.