In the first few days of the financial crisis, attention was turned to investment banks and mortgage lenders in serious trouble. Then the foreclosure crisis took over and people lost their homes, often due to poor practices by lenders. Finally, millennials in their 20s, and many now in their 30s, found out that the consequences of all this would be their banishment from homeownership. Strict new rules made it almost impossible for many to afford the deposits and meet the criteria for mortgages. Many others, however, struggle to get mortgages because their credit scores are bad be it from credit card debt, mortgage issues previously, student debts, or even having no debt history at all.
2016 and Quick Recap
The year had not begun with much optimism. Indeed, the mortgage industry was bracing itself for a 20% drop in residential mortgage originations. The introduction and perfection of TRID was expected to lower the selling of loans in the secondary market by financial institutions afraid of breaking new consumer disclosure rules. The two, a downturn in business and increased compliance costs, were expected to hit the market hard.
None of this occurred during 2016, Fintech firms offering direct to consumer services are eating into the market, but interest rates did not change, and volume actually increased. In fact, new home sales rose 16% with an end of year trend which suggest further rises in 2017. With regard to interest rates, they actually fell in many regards with the 30-year fixed-rate mortgage at its lowest level for 3 years.
Improving Market Conditions
At the start of the 2017 financial year, the mortgage market in the U.S. is at that pivotal stage for lenders and prospective homeowners where the market is improving and residential mortgage rates are increasing, but the overall rates are still low enough to make a good investment. Currently, the economy is performing well, the market is strengthening, and purchase rates are recovering from the economic crash/foreclosure crisis of 2007-08. This growth in confidence among lenders means that they are loosening their parameters for mortgages. They will not be as open as they were prior to 2008, but many brokers are less cautious than over the last decade.
Fixing Your Credit Rating In Advance
A loosening of the market while interest rates are low, will open more people up to mortgages, but if you have a poor credit rating, you need to find ways to fix your credit. This does not have to be so bad, but you do have to research properly first and ensure you get it right. To do this, you need to:
- Get your credit report from Experian, Equifax, or TransUnion.
- Work with creditors to remove active debts and develop payment plans
- Look for errors in your report to fix and remove
- Ensure future payments are made on time
- Write letters of dispute for any errors found
- Hold off on applying for fresh credit until these are resolved
Don’t Give Up On Your Homeownership Dream
This can be a lot of work for many people, however, there are expert agencies out there who can help you fix your credit rating. When considering an agency, you need to look for one who can work on your particular problem at an affordable price. You also need to be smart with your money, so there are a range of things to avoid and things to look for. Let’s take a look:
Things to avoid:
- Companies demanding money upfront
- Any promise of a new credit file
- Companies wanting your CPN rather than your Social
- Promises to delete accurate information
Instead, you should look for:
- Companies with a good, successful track record
- Those who explain your rights up front before you sign
- Agencies who work with Experian, Equifax, and TransUnion (all three, so have not been blacklisted by any one of them)
- Those who offer educational material for building better habits
By working with a good credit agency, you can take advantage of their better expertise, knowledge, and eye for errors. If you can fix your credit rating and debt problems early on, while holding back on fresh credit applications and saving money for a deposit, you can make an excellent mortgage application while the market is still ripe.