Getting mortgage in 2010 - how to get the best mortgage : Bad Credit Advisor

Getting mortgage in 2010 - how to get the best mortgage

2010 is almost here and while getting mortgage in upcoming year will be easier than in 2009, getting a good mortgage could be more difficult than you expect. One thing to get out of the way is the persistent rumor that with economy improving, interest rates will rise. If you are firmly set on getting mortgage in 2010, this should be the least of your concerns, as long as your income is secure. Economy is not improving and the government will do everything in its power to keep rates low for two reasons. First, to continue subsidizing housing market which is not recovering, contrary of what you are being told. Second, to keep U.S. dollar weak to spur demand from overseas for U.S exports. Actually, with the American consumer lacking any significant buying power, exports and cheap dollar will be the only bright spots. So those of you, looking to buy a house in 2010 should be less concerned with what our inept government will do to the interest rates, than with how to put your financials together to get the best possible mortgage rate, either for buying or refinancing. The key to getting mortgage in 2010 will be your credit rating, a broad term which includes not only your credit credentials but also your cash reserves and the size of down payment or existing equity in your current house known as Loan To Value (LTV) ratio - both were quite nicely explained in Credit Rating - how sub prime lenders rate your credit? written in February of 2006. While you can drop sub prime part, the rest of this article is quite relevant today and can give you a nice idea on how to proceed.

Getting mortgage in 2010 - down payment, equity
While the lending standards will be still quite tight, a large down payment on a new house or a nice equity left in the house you still live, will open many doors for a purchase or a refinance transaction. For the best rates you should put 30% down on non-jumbo loan when buying, and have 65% equity when refinancing. Currently, any purchase with jumbo mortgage requires minimum 30% down payment and do not expect this to be any less in 2010.

Sure, you can put as little as 3.5% and get FHA loan. While the interest rates are not bad, they are not the best. In addition, FHA loans come with some strings attached. The biggest worry I have is that Fed will tighten the standards and lending requirements on FHA loans as well, because according some reports, 20% of newly issued FHA mortgages are in various stages of delinquency. They are government insured of course, but then even government can not bail out everyone. Read Credit score for FHA loan and FHA loan requirements and qualifications.

Getting mortgage in 2010 - credit score
The minimum credit score for mortgage in 2010 is staying at 620 for the time being, but for the best results, raise your FICO score over 750. To achieve this quickly, try to raise your revolving credit utilization rate, by lowering your credit card and home equity line balances, asking for credit line increases from the lenders and by opening new revolving lines of credit if possible, including department store cards that could be the easiest ones to get. Plan to do it in advance, at least 2 months before getting mortgage, so the changes would be reflected on your credit report.

Other relevant pages that could be of interest,
Check your credit rating
Repair your credit rating
Credit rating
Credit score

Wed Dec 30, 2009 10:12AM by Tony | More in Mortgage | Comments (0)