News – AU mortgages are finally getting a little easier

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Getting started!

Getting started!

Getting started!

Getting started!

by Maurie Backman | Feb 23, 2021

The rise is supported by the reader: We can earn a commission for offers on this page How we make money Our editorial integrity, however, ensures that the opinions of our experts are not influenced by compensation

Good news for borrowers – lenders may relax the requirements for qualifying for a home loan

Mortgage rates hit record lows in 2020, tempting many people to go out and buy houses However, qualifying for a mortgage was not exactly easy during the pandemic

Many mortgage lenders have gotten tougher when it comes to borrowing money in the wake of the wider economic downturn, but new data shows that may change

The Mortgage Bankers Association’s Mortgage Credit Availability Index rose 2% to 1246 in January, which is still the same as in 2014, but it also means lenders are easing their requirements slightly (the higher the index’s value, the it is easier to take out a mortgage) And that’s good news for mortgage applicants

If you are hoping to buy a home anytime soon, you probably cannot afford to buy it right now; rather, you will need to finance it with a mortgage, but for this to happen, a lender must say yes to your request, and it is more likely if you do these things first

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Your credit score indicates how trustworthy you are as a borrower The higher your score, the more confidence a lender has that you can keep up with your mortgage payments.Usually, you need a minimum credit score of 620 to qualify for a mortgage In lending today, however, you may need to get much better results, and to get a really competitive rate on your mortgage, you need your score to be in your mid-700s or higher

You can improve your credit score by paying all incoming bills on time, keeping long-term credit cards open, reducing unhealthy credit card debt, and reviewing your credit reports for errors (and correcting those found) You can also help your credit by holding back applying for new credit other than your mortgage However, it doesn’t have the same effects as processing invoices on time and reducing the credit card debt you have

Your debt to income ratio is another important factor that mortgage lenders use to determine if you are eligible for borrowing, and it measures your monthly debt payments relative to your income. So the lower that ratio, the better if you are in debt So try paying these off before applying for a home loan. Start by turning off credit card debt, as it can also help improve your credit score – not to mention saving you money on expensive interest rates

Mortgage lenders want you to have assets for a down payment and money in the bank to keep up with the cost of owning a home. You don’t necessarily have to save enough to save 20% on your home, but if you do By being able to do so, you not only increase your chances of getting a mortgage but also avoid private mortgage insurance – an expensive premium that can make your home much more expensive

The fact that mortgages are getting easier to qualify means that more borrowers may be lucky as 2021 creeps forward, doing your part to make yourself the best home loan candidate possible if you want to apply for a mortgage on these Wise, take advantage of today’s exceptionally low rates

Interest rates likely won’t stay at decade lows for long, which is why taking action today is critical, whether you are looking to refinance and cut your mortgage payment or whether you are ready to be the trigger for a new home purchase to press

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Maurie Backman is a personal finance writer covering everything from savings to retirement to health care. Her articles have been published on major outlets such as CNBC, MSN, and Yahoo

The rise is supported by the reader: We can earn a commission for offers on this page How we make money Our editorial integrity, however, ensures that the opinions of our experts are not influenced by compensation

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Finance, Credit Score, Mortgage Loans

News – AU – Mortgages are finally getting something easier

Source: https://www.fool.com/the-ascent/mortgages/articles/mortgages-are-finally-becoming-a-little-easier-to-get/