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Mortgage rates are bouncing off of 40 year lows.  Seems like the best time to buy a house or refinance.  Not so fast – there is a catch.  You have to qualify first!

Before the recession, qualifying for a mortgage was not much of an issue.  The overall standards were pretty low.  If you had a low credit score, you could still qualify for financing.  Your credit score did not necessarily determine if you qualified more so than the rate that you qualified for.   People with higher credit scores received lower rates and people with lower credit scores received higher rates.  But just about everyone qualified for something. 

The lending environment today is vastly different.  Only those that meet the highest qualification standards can get financing.  According to the Federal Reserve, about seventy five percent of those that apply for financing are qualifying.  Of course, the number of those applying for loans has decreased significantly. 

According to Fannie Mae and Freddie Mac, the average credit score for loans that they finance has risen to 760.  It was 720 just a few years ago.  For FHA loans, the average score has increased to 700 from 660.

The subprime market has just about disappeared altogether.  Before the recession, subprime lenders routinely made loans to borrowers with credit scores below 620.  Today, it is very difficult to find lenders willing to make these loans. 

If you are thinking about financing, you should check your credit score.  If your score is below some of the qualifying averages, take proactive steps to improve your credit scores.  Remember, about eighty percent of the credit reports contain errors.  With a little bit of effort, you might find that you do qualify for a loan at the current rates after all.

First, let’s talk about disputing. As a consumer you have every right to dispute any accounts and/or personal information on your credit reports that you feel has inaccurate, misleading, and/or incomplete information. Now, don’t be misled into thinking that means the entire credit account must be or has to be wrong in order to dispute the account. As consumers we need to review our credit reports at least once a year for errors. We need to look over every account and make sure the balance is reporting accurately.  If there are late payments reporting, look over them and make sure everything is accurate.  If something shows open when it should be closed then it needs to be updated, if the balance is wrong then it needs to be updated as well.  If something is reporting that does not belong to you then it needs to be disputed and removed.

Now that you know what needs to be disputed, let’s talk about the affect it will have on your credit score. When you dispute an account it will show on your credit report that the account is in dispute, but that should not be looked upon as negative. Now, if you pull your credit score while you are disputing accounts it will make your credit score fluctuate. When you pull your credit score it pulls that information at that exact moment and calculates the score. Any account in dispute will not be factored into your credit score at that time. That can have a positive affect or a negative affect on your credit score. Since it can have a negative affect it is usually best if you do not pull your credit score or apply for credit while you are disputing credit items on your credit reports. If you wait to apply for credit then you will allow time for the disputes to be finished and hopefully your credit score will increase from the work that was done. Another reason you want to wait for disputes to be complete, is that A LOT of mortgage brokers will not close a loan if your credit reports say an account in dispute. So, it is best to dispute everything you need to dispute and get your credit reports updated before you apply for a mortgage loan.

For all of your disputing needs, call the best in the industry – Ovation Credit Services. Our Credit Analysts are here for your FREE Credit Consultation and to answer any of your questions. Call us at 1-866-639-3426 option 2.

If you have a question for our Credit Expert Kristi Thornton, send an email to Lynn@ovationlaw.com.

Do you feel that each month is putting you one step closer to Foreclosure? Are you falling behind on your bills and not sure if you are going to recover? It is time to take a few minutes and look deeply into your finances.

Many people don’t pay attention to their finances until it is too late. Especially if they are struggling to pay all of the bills each month. If you have not setup a budget or you don’t seem to be following the budget very well, you should get it in line and start managing your money better. This is one of the most important beginnings to save your home and get your finances corrected. Generally, If you have not been using a budget you can get yourself fixed and keep your home from foreclosure.

Now if you have been working under a budget and are still having problems then you may be looking at foreclosure. Start by looking where you can cut your expenditures and see if you can apply enough money to saving yourself from a foreclosure. Cutting costs can be across the board and include anything from losing your second car. This will save you a car payment, Insurance, maintenance costs. Surprisingly this might even come close to ½ of your house payment. This could be the saving grace if you are paying attention.

Also, if you are paying for a daycare, you may want to find out if your neighbors are also paying for daycare. If so, you might want to get together and see if you can share costs on daycare. Instead of hiring a company to watch 2-4 children, you can hire a sitter for the hours needed. Maybe you can share the house. One week at your home, the next week at your neighbors home.

I also got with my In-Laws and we went shopping at the local warehouse store. We bought things like paper towels, toilet paper, food and many other items in bulk. We then would split the bill and the merchandise. I bought a food saver and we vacuum packed the food we bought in bulk and froze it in individual portions. This really saved us some money and we were able to purchase food basically once a month. We bought the foods that would perish weekly so that we did not have anything go bad. We also watched for any case sales and bought items when they were on sale.

We found that by doing this each and every month we almost saved one-half to three-quarters of our house payment each month. This made it very easy to make the home payment. After we got back on top of our bills, we started doubling up on our house payment and working to pay it off early. It really was good when we had to go borrow on some of our equity due to some medical bills. We were able to borrow money at a pretty good interest rate because not only were we ahead on our bills, we had actually reduced our debt and it really helped our credit score.

If you are looking at foreclosure and don’t see any other option, take the time to talk with an attorney regarding bankruptcy. You might be able to keep your home while reducing your other debts. This might allow you to keep your home. Home Ownership is very important to most families. Lastly, look into refinancing or speaking with your lender and see what other options might be available to you. Foreclosure does not have to be the answer if you are willing to search for your other options. Foreclosure will damage your credit report for many years and if you can avoid it