ORLANDO, Fla. – Jan. 14, 2009 – Qualifying for a mortgage is not nearly as easy these days as it was just a couple of years ago, before the sub prime-loan-market collapse and the worldwide credit freeze. Still, mortgages are approved every day, even for home buyers with less-than-sterling credit records.
“If you have over a 580 [credit] score, you have a chance” of qualifying for a home loan, said Marie Martin, a veteran broker with Mortgage Crafters in Brevard County. “A 600 score is better, and 620 and over is very good. You shouldn’t have a problem.”
Consumers can get copies of their credit reports from each of the three major reporting companies at no charge at least once a year, but your credit score – a single number that typically ranges from a low of 300 to a high of 850 – will cost you $5 to $10 under most circumstances.
Before seeking a mortgage, get a copy of your credit reports to check for inaccuracies and to gauge just how much information and detail – good or bad – your borrowing record contains. A consumer whose credit score is a little too low to qualify for a home loan may need a year or two, or more, to establish an improved track record.
These days, a larger share of the loans being made are insured by the Federal Housing Administration, Martin said, and they allow down payments as low as 3.5 percent for qualifying buyers. Private lenders still make these FHA loans, but the government agency backs them for borrowers who meet its guidelines. The FHA has a variety of tools for helping home buyers learn how to qualify for a mortgage, available online or by calling 1-800-CALL-FHA (1-800-225-5342).
With housing prices down 25 percent in the past year alone and interest rates lower than they have been in decades, more people can qualify for a home loan based on their ability to meet the monthly payment, at least on paper. For those who think they are ready financially, who expect to remain put for several years and who want to own a home, here are some suggestions from industry professionals and the U.S. Department of Housing and Urban Development that may improve your odds of getting a mortgage:
- Don’t assume you won’t qualify. Do some basic research on how to buy a home at the local library and on the Internet. The FHA has a handy Self Assessment Tool Kit to help prepare for home ownership; it’s at http://fhaoutreach.gov/FHASelf.
- Document your history as a reliable tenant. At least one or two years’ worth of canceled rent checks or receipts showing a consistently good payment record is helpful.
- Make an appointment to sit down with a local mortgage broker or lender. Get a professional to review the details of your personal situation. They will usually do a free qualification analysis in hopes of getting your business. They can identify problem areas that may be correctable.
- If you use a mortgage broker, make sure he or she is in good standing with state regulators. Mortgage brokers represent multiple lenders and can help you find the best deals. But they also charge a fee, which is included in the loan. When choosing among brokers, check their state licenses with the Florida Office of Financial Regulation. You can do it online at tinyurl.com/749lgf