Of late, there has been a discussion in the MortgageFit forums, where a poster has asked queries regarding qualifying for a home loan. The poster is willing to buy a home for $667,000 with a down payment of 50%. She has a credit score of 620 and an income of $92k per year. Her husband is out of work, but he is about to have a job of $100k next month. His credit score is 700. The poster paid off all her credit cards as well as a delinquent account (medical collections). She’s concerned that she might not qualify as her credit report still shows the credit card debts and the delinquent account. She asks:

How long will it take for her credit scores to improve?
What are her options for a home loan?
Will it be wise to keep her husband on the loan, even with no income?

It’s good to know that the poster has been able to pay off her credit cards and the medical collections. This will help her improve credit scores, but it’ll take about 30 days for her credit report to reflect the changes in her scores.

How can she improve her credit core fast?

She can take help of rapid rescore to improve her credit scores in quick time. Rapid rescore is a service through which your credit is evaluated to ascertain what is primarily causing your credit scores to drop. If you have any collections or any derogatory items on your credit report, and you’ve paid them off, companies providing rapid rescoring services work with the all 3 credit bureaus – TransUnion, Equifax and Experian - to have the items removed from your credit as soon as possible. However, this service can be availed only by lenders, not by borrowers. Thus, our poster can request her lender to do a credit rescoring as a quick solution to her issue with the credit. (more…)

Housing prices are still going low and most of us are thinking that it would be the best time to buy the dream home in 2010. With the extension and expansion of first time homebuyer’s tax credit, things have become easier for most of us. However, before you decide to apply for a mortgage in 2010, here are 5 things you need to know:

Tighter lending rules: The first time homebuyer’s tax credit has been extended by the government and more people are looking forward to buy a home. However, it’s expected that the lending rules will remain tighter throughout 2010. After the real estate crisis took place, lenders have become extremely cautious. There are hardly any loans available without down payment. Moreover, no-doc loans have also become obsolete these days.

Credit score: In order to get best mortgage rates, especially for conventional loans, you would require a credit score of at least 620. The lenders would ask you for documents supporting your income and other assets. Check your credit reports on a regular basis to know if any unnecessary negative item is mentioned in it. If you find such an item, take steps to remove it. You can get a free credit report once in a year from annualcreditreport.com.

Down payment: Presently FHA loans require a down payment of 3.5% and conventional  loans would require at least 20% down. Making a down payment will help you get better interest rates. Also, you must understand that if you’re unable to pay the required down payment, you will have to go for private mortgage insurance.
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