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How to's and money-saving tips from resident homeowner and mortgage professional, Cathy West

Navigating lenders’ mortgage credit restrictions

Data suggests that there are many people nationwide who, historically speaking, are at prime homebuying age but not actually moving to get into the market. The reality is that these conditions could have arisen for any number of reasons, not the least of which is financial difficulty brought on by the economic downturn, or life situations that simply don't lend themselves to making a purchase. But another condition that may be affecting consumers here is they're wary of even trying to obtain mortgage credit because they know how difficult it is these days.

Indeed, data suggests that the average American, with a score much closer to 650 than 750, still isn't even going to be close to being able to meet most mortgage lenders' credit standards. This despite the fact that mortgage risk is still near all-time lows and the economy has been in recovery mode for years. As such, most people probably feel like they're not close to being able to qualify. However, some experts also point out that many would-be buyers may have an easier time than they might think.

Down to brass tacks
Are lenders' credit standards generally still higher than the average person can meet? Yes. Does that prevent them from making a few steps over the course of a short period to improve their positions and boost their chances of getting a home? No.

The fact is that anyone who is serious about buying should be going through some basic credit repair steps these days anyway, because the higher they can get their scores, the more affordable a mortgage is likely to be in terms of the interest rate they pay going forward. In addition, these consumers should also be striving to make sure they can increase the size of the down payments they can make, because that, too, is likely to help them get approved.

Taking the big step
Those who are even close to being in a position to buy have likely already practiced significant financial discipline if they've built up potentially tens of thousands of dollars in savings necessary to meet baseline down payment requirements. Using the same principles, they can improve credit as well; instead of putting their money into savings, they can use it to pay down outstanding balances and make sure to catch up on any payments they might have missed in recent months.

The amount of outstanding debt in a person's name and the number of late payments they've made over the past several months are the two most important factors in a credit score, making up a combined 65 percent of a rating by themselves. As such, if they can straighten out those two issues before they enter the mortgage application process, their scores are likely to rise quickly. And that can put them in the best possible position when it comes to buying a home in the near future.

For more information about this article, call 866-614-5959.

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