When it comes to buying a new home, the one thing you can almost always be assured of is that you will need a good credit score. Unless you can pay a high percentage as a down payment, most lenders will require a down payment of at least 3% to 5% of the purchase price or assessed value. Oddly, that is a low estimate as most lenders require more. If you have a credit score which is less than 600, you need credit help and you need it now if you intend to buy a home in 2018. Here are 3 reasons why.
1. Lenders Still Stinging from the Role Mortgages Played in the 2008 Market Crash
While there were several underlying factors leading up to the market crash of 2008, mortgages did play a huge role in the Great Depression. Lenders are still stinging from the great number of foreclosures leading up to the recession and many of the leading conventional lenders are still stinging from the heavy financial losses they took.
Actually, derivatives on the stock market were the ultimate cause leading up to the crash, but losses incurred made it necessary for investment firms to buy up more and more mortgages. Since mortgages to buy were at a premium, lenders began underwriting just about anything if it even remotely looked like the borrower could make payments. As we all know, people borrowed over their ability to repay and the market crashed.
Conventional lenders are considerably stricter in underwriting mortgage loans in 2018 because many are still trying to recover losses incurred in the Great Recession.
2. A Good Credit Report Is a Must – Here’s Why
As noted above, lenders are still hurting over the losses they incurred in the crash of ’08 and so are often reluctant to lend such a large amount to anyone with anything less than almost perfect credit. While you may find some lenders willing to underwrite a mortgage loan with credit scores as low as 580, most conventional mortgage lenders will want a score of 620 or higher. If your score doesn’t meet those requirements, it’s time to get credit repair assistance so that you can qualify for a mortgage loan in 2018. Why wait if your credit can be repaired?
Credit repair experts at Lexington Law provide some small adjustments to help improve your credit in the long run in this blog post. “Building good credit is a lifelong process,” Lexington states. “Most people get started in high school or college with a credit card. Then maybe they rented an apartment, paid for utilities, and got approved for a car or other loan — all of which added to their credit profile. Over time, credit reports may record all of these actions and patterns of behavior – good and bad. A few late payments or too much credit card debt may leave blemishes on your reports. But you can still take action now to improve your credit over the long term.”
3. Some Debts Can (and Should) Be Disputed
Finally, there are probably some debts listed on your credit report which can be disputed. Some people are reporting a rise in their credit score as high as 40 points within just a month or two by disputing debts which shouldn’t be on their reports. While some creditors are quick to report you for nonpayment, those very same creditors are not so quick in reporting timely payments. It’s sad, but often true.
You can get help from a credit repair service in disputing any marks against your credit. Sometimes it’s a complicated process which requires a specialist to handle. Sometimes you can make that phone call yourself to dispute a balance reported that impacts your credit score. However, if they weren’t motivated to report good payments as you made them, what makes you think they will act ethically now? Let an expert deal with those erroneous marks against your credit.
Start the new year fresh with a score that is high enough to qualify you for that mortgage. Let 2018 be the year you finally move into that home you’ve always dreamed of owning.
