Watching Your Wallet: Mortgage Loan Criteria Changes
BATON ROUGE, La. (WAFB) - If you’re trying to apply for a mortgage loan but you’re having some trouble, there could be a big reason why.
Mortgage lenders want to know you’ll pay back that loan. So, they’re tightening up the criteria when it comes to lending people cash to buy a house.
Do you need to apply for a mortgage loan? If so, how’s your credit from a couple of years ago? Now, most people try to clean up their credit history about a month before applying for a mortgage loan. But the rules are changing.
Last October, the Federal Housing Finance Agency approved a big change in how lenders look at your credit history. They won’t just be looking at what your credit looks like in the last month or two. They’re going to look back as far as two years.
So, if you’re even considering moving in the next few years, it’s time to pay off that debt. The new scores are called the FICO 10T and VantageScore 4.0 scores and they’ll provide lenders with a lot more information about how you manage your money.
This works just like your electronics, kind of like when your cellphone updates. This is how lenders update what they do. This helps them determine if you’re a good bet to pay back the loan you’re asking them for.
Start by requesting your credit report from the big three credit bureaus. Mistakes are not out of the ordinary, so you’ll want to take care of those first.
If you carry credit card debt, you may want to open a balance transfer credit card to help you tackle that debt more easily.
Roughly 4% of Americans are behind on their mortgage payments, and about 7% are afraid of foreclosure.
This will likely go down as lenders tighten up who they lend money to in the future.
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