The mortgage industry has fallen victim to a credit crisis and borrowers need to prepare themselves for the months to come. If you are planning on refinancing your home or investment property in the next year or two, there are a few important factors you need to know.
Due to poor market conditions, American Home Mortgage and its counterpart American Brokers Conduit had to file for bankruptcy and closed more than $58 billion in home loans last year. Many borrowers were left without financing and had to search for new creditors to supply them with loans. Since these companies have filed for bankruptcy, credit conditions have tightened causing more borrowers to not be able to qualify for mortgage loans and interest rates to increase. Borrowers who have ARMs also might be surprised to find their payments double once their ARM resets to current market rates. Therefore, those with fixed-rate loans who are considering refinancing their home could be taking a huge risk.
Borrowers who qualify this week for a loan might not next week and any delay in current deal closing could result in no deal at all. So if you had formerly planned to hold out for better prices, you could be spending thousands of dollars more instead. Now more than ever consumers need to focus on their credit scores in order to ensure the financial health of any potential loan.
During such crucial times, it is vital to start building your credit to be a benefit rather than a hindrance. Credit repair is real and can save you a considerable amount of money through the life of a loan. When looking for loans, especially home loans, your FICO score becomes the most important factor in determining your interest rates and whether or not you qualify for the loan. Therefore, you want to be sure you take all the aspects of a FICO score into consideration. This means making sure that your credit report reads fewer derogatories, you make payments on time and you keep your revolving debt ratio as low as possible. An increase of 20 points to your score could save you tens of thousands of dollars over the length of a loan. In such time of credit crisis, the higher your score the better off you will be when looking to qualify for a loan.
To learn more about how you can help increase your credit score, go to Dr. Alan Rosenthal's website at http://www.financialsolutionservices.com where you can find more great information on credit improvement. And, you are cordially invited to sign up for a FREE Credit Repair and Enhancement Workshop by visiting http://www.financialsolutionservices.com/upcomingevents.html For additional information listen to one of Dr. Alan Rosenthal’s credit talks at http://www.financialsolutionservices.com/credittalks.html
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