First-time homebuyers and those thinking about refinancing are in a great place.
Mortgage rates just fell for the third straight week, according to mortgage finance firm Freddie Mac.
“The credit markets are still tight, but they have loosened up significantly from 90 days ago,” said Scott Norman, vice president of the Texas Mortgage Bankers Association.
So is this a good time to enter a mortgage transaction? It might be, if you can qualify. “The two biggest issues are going to be credit and down payment,” Norman said. “Those are really going to trigger your ability to get a mortgage in a decent amount of time.”
Here’s what you’re up against in specific mortgage situations and what you can do to increase your chances of getting a deal done.
If you’re buying a home
Get ready for paperwork. Have your bank statements, W-2 wage and tax statement and pay stubs organized.
“Overdocumentation is the name of the game right now,” said Linda Davidson, senior loan officer at Service First Mortgage in Garland, Texas.
Having all the documents upfront will speed the application process.
Check your credit score. The most widely used score is the FICO, which ranges from 300 to 850. Your score, based on information in your credit report, helps lenders predict how likely you are to make your payments on time. The higher the number, the better the chance you’ll be approved for a loan at a low interest rate. “Clean up your credit score,” Norman said. Catch up on any late payments and pay off or pay down your debt.
First-time buyers have a sweetener in the form of an $8,000 credit on federal income taxes for homes purchased before Dec. 1.
It’s critical that you have a down payment because lenders want to see that you have skin in the game. Mortgages insured by the Federal Housing Administration require a 3.5% down payment, which can come from a family member, employer or charitable organization as a gift. For a non-FHA-insured loan, lenders are requiring a 10% down payment, said real estate agent Brenda Rogers of Coldwell Banker Apex, Realtors in Plano, Texas.
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