The housing and mortgage market has, of late, been full of turmoil to say the least.
The United States has seen accelerated numbers of foreclosures, in addition to average house prices falling down to record lows. Because lending institutions offered many loans to high risk consumers during the �housing bubble� of 2004-2006, together with an uncomfortable amount of adjustable rate (arm) loans (or interest only loans), consumers became unable, or simply unwilling, to pay the cost of their skyrocketing monthly mortgage rates. This in turn has resulted in the crisis many homeowners now find themselves in. Due to the record number of loan defaults, lending institutions have become much more reserved in their lending practices. In order to be even considered for a mortgage or a loan, an excellent credit score is a must have. Recently, this was not the case as the leniency of financial institutions created the peak of the mortgage market a few years back.
Stable employment, preferably at a job you have been at for at least two years, and documentation such as W2�s, and banking statements are vital. Your ability to pay back the loan will be closely scrutinized, based on your debt to income ratio. This simply means how much money is coming into your household each month, and how much is going out. Any other loans you are currently paying on will be factored into this equation, such as credit card payments, and car loans. Does all this mean if you don�t have perfect credit, you are automatically excluded from the tremendous price reduction of properties all over the country? No, not necessarily. We will continue to see these lower housing prices until the overall economy makes an upswing, so don�t feel like if you can�t purchase right away you are going to miss the boat.
The best thing one could do is start to put righ any credit issues you may have today. Many credit counselling programs are available to help you consolidate all your past debts and roll them into one monthly payment. Make sure you pay all your current bills on time. Not only will lenders look at your rental/mortgage payment history, but they will also asses your utility statements. Paying these on time will help you establish a stable history of repayment, thus, considerably increasing the probability you will be approved for a loan. Lastly, try not to accumulate any more debts before trying to get a home mortgage. The lower your debt to income ratio is, the better.
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Need to raise cash quickly in light of the financial crisis surrounding the housing market? It could help to ease your own financial pressures if you
sell and rent back your home. This could be a good way to
stop repossession of your home.
