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Do You Qualify for a Mortgage Today?

Mortgage ApplicationSome Crofton Maryland homeowners might not qualify for the mortgage they already have, if they were making application today. That’s because lending standards are so much stiffer now than they were in the past.  

Nearly one-third of all Americans do not have adequate credit scores to qualify for a mortgage now, according to Steve Cook, writing for Real Estate Economy Watch.  This is based on analyzing more than 25,00 loan quotes and purchase requests on Zillow Mortgage Marketplace between September 1–15, 2010.

And remember, rates are UNDER 5%…  Just imagine how many fewer people would be able to finance a home at the interest rates we saw a few years ago – at 6 or 7% (not to mention the 10%+ of a few decades ago). 

The majority of today’s borrowers have a credit score of 620–720, and their rate will graduate depending on their credit scores –  about .12 percent for each 20–point credit score increase.  The low advertised interest rates you see online or in the media are reserved for borrowers with 720+ credit scores. 

Do you know your credit score?

Crofton home sellers are affected by the new tougher loan standards, as well, because fewer prospective home buyers are able to qualify for a loan than in recent years.  Credit scores are not the only issue, however…  Today’s higher down-payment requirement makes for a double-whammy. 

Zero-money-down Conventional loans have been replaced with 20% down Conventional loans (that would require a $60,00 cash down payment for purchasing a $300,000 Crofton townhome).  VA and FHA financing are still available, however, and most Crofton homes fall within the loan limit guidelines of these programs.  

Crystal ball 4x6My crystal ball is not showing any softening of lender requirements in the near future, so it’s critical for all of us –  even if we’re not planning a move in the next year or two –  to invest a little time improving our credit scores.  I highly recommend you check out the Federal Trade Commission website offering Facts for Consumers about credit scores:  how to get one, how to correct errors, and who else can access your credit report.

After all, you never know when your dream house will go on the market at a bargain price… you’ll want to qualify for a mortgage if that happens.

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For answers to your real estate questions about Bowie, Crofton, Davidsonville, Fort Meade, Gambrills, Odenton and other communities in Anne Arundel County or nearby Prince George’s/Howard Counties, Maryland, contact Margaret Woda at Long & Foster.  If you prefer, simply click on a button below for information you can review online at your own pace.  

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