Educating Buyers about Credit Key to Maintaining Rebound
Access to mortgage financing remains one of the most important factors needed to continue to fuel a real estate recovery. Unfortunately, mortgages could become much harder to get it some have their way, making educating buyers on how to boost and maintain their credit scores essential.
Most think mortgage lending has already tightened up way too much. Few programs are left and those which are still out there seem to be getting more expensive, requiring more money down and are seeing credit requirements go up. However, some are calling for even tougher qualifications!
In the wake of recent data showing a spike in FHA foreclosures and almost 50% of those receiving loan modifications back in default within a year some bankers claim “credit standards are way too loose”. Tighter lending could threaten to not only throw the real estate market back into the hole and cause even more defaults but could be a knife in the back, crippling the entire economy.
As hard as it may seem, the smart thing to do may be to stop promising bail outs and refinances that don’t really help and stop encouraging borrowers to default, while loosening lending standards to sensible, common sense based guidelines. Of course this isn’t likely to happen until after November at the earliest.
The bottom line is that real estate professionals, investors and consumer protection groups ought to be focused on education. The upcoming election may be the only power some have in making their voice heard about which way things should go but assuming the worst the key to fueling the rebound and keeping things headed in the right direction is educating consumers on how to improve their credit and hit those high scores of 740 and above.
To maintain this level of credit requires conscious strategy and a proactive approach. Knowing when to apply for credit and when not to. Knowing how many credit lines to keep open and of course committing to keeping balances below 30% of their limits. Those hoping to get mortgages also need to be made aware of the traps that no payment or no interest deals and student loans can present when it comes to qualifying. Otherwise the disparity between classes is only likely to get worse, with a growing percentage of the population being doomed to be renters.
Don’t let TV advertising and slick marketing campaigns draw you into bad debt, take your credit seriously. Besides owning a home or investment property your credit is you most important asset.