Is it harder to get a mortgage if your credit isn’t perfect?

Although everything in the world of mortgages is not black and white, generally you must take good care of your credit history to easily obtain a mortgage. Lenders consider credit scores to determine if you are worthy of a loan.

Most lenders see scores above 700 as positive indicators of good credit health while scores below 600 are deemed to be risky. Interest rates for mortgage loans are higher if your credit score is in the lower ranges.

Lenders seem to be pulling in the reins on mortgages or refinancing if your credit score has marks on it. Many lenders don’t want to handle riskier loans when the market is slower.

Novastar Financial Inc. of Kansas City, MO, lost 42 percent of its share price due to a fourth quarter loss of $14.4 million. Company officials set aside $45 in anticipation of defaulting mortgages.

When the market shifts, investors demand much higher standards to approval a mortgage loan. This shift causes some consumers to be squeezed out of the market.

During the past few years, many homeowners borrowed against their homes while the market was forging forward. They now have second mortgages and home equity loans to pay when the economy is tightening. Real Estate prices are leveling at this point.

The nation’s economy may be affected by the slowing housing market and increase in the interest rates. The trend for lenders and investors will lean toward more care when handing out mortgage loans. This does not mean you can’t obtain financing, it just means it make take a bit of creativity.