December 1, 2023
What can borrowers expect from an American economy trying which is STILL in the process of recovering from the negative financial effects of COVID-19?
Some experts are currently talking about the minor gains in mortgage rates and interest rates falling overall but are quick to point out that those with FICO scores below the lender’s typical approval range are experiencing more costly loans.
Some house hunters may find it harder to qualify even as rates seem to be cooling somewhat. And certain types of home loans such as cash-out refinances aren’t even on the table for some borrowers until rates cool off even more.
What does all this mean for a borrower who isn’t even ready to get pre-qualified yet?
The future promises to be unpredictable, financially speaking. We are experiencing unprecedented levels of volatility in the markets, there is a fight against inflation, and worries of a recession. It will take time for these things to sort themselves out, but in the meantime, any house hunter or refinance loan applicant still needs to pay strict attention to their credit scores and credit patterns.
It’s a wise move to explore your options for credit monitoring and research ways to improve your credit score today, including reducing your credit card balances over time and paying all bills on time, every time.
Credit monitoring can help you to catch and correct credit report mistakes and evidence of identity theft, and keep your credit report accurate. Plan on working on your credit at LEAST one year in advance since lenders will be looking for a minimum of 12 months’ worth of on-time payments.
Borrowers with lower FICO scores are paying more for home loans and other large lines of credit and are likely to do so for some time. The amount you pay will vary depending on the lender and it’s more important to shop around for a loan than ever.
If you want to pursue a home loan but need some advice on how to get ready to apply in this era of elevated mortgage rates, why not consider calling the Department of Housing and Urban Development at their toll-free number 1-800 CALL FHA to request a referral to a local-to-you, HUD-approved housing counseling agency.
FHA home loans have always had more flexible approval standards than conventional mortgages. Still, in the current economic climate, even FHA mortgages could be more challenging in the coming year unless you take steps to shore up your credit, pay your bills on time, and maintain your scores.
Lower rates are likely coming, but in the meantime, we must wait out the ups and downs of a market still trying to enter recovery mode.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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