Improve Your Credit Score to Take Out New Mortgage Loans

The credit crunch has made lenders wary of approving new mortgage loans, and has discouraged many would be borrowers from making applications. Many homeowners and would be homeowners think there is no point to applying for a new mortgage loan or trying to refinance an existing mortgage. However, now may be the best time of all to fill out an application for a new or refinanced mortgage.
Why is that? Because the Fed has attempted to stimulate economic growth with a series of rate cuts, leading lenders of mortgage loans to lower their interest rates as well. That can be excellent news for you, leading to much lower monthly payments and a lower overall cost for mortgage loans. If interest rates have dropped at least two percentage points between when you signed your mortgage and today, then now is the time to refinance and lock in a lower interest rate.
But arent banks leery of giving out new mortgage loans? The answer is both yes and no. The key is the borrowers credit rating. Banks are more wary than they have been about offering loans to borrowers with a poor credit rating, and they are using more stringent guidelines for deciding what constitutes a poor rating, but they are eager to draw in new lenders with good credit ratings. Get a free credit report and discover what your credit rating is, and if it is good, then apply for a mortgage right away.
If your credit rating is slightly below the zone considered good, then there are a few simple steps you can take to raise it over the next six months. Pay all your bills on time scrupulously, putting them on automatic withdrawal if you can. The ratio of credit you have used to total credit you have available is important, so pay off as much as possible of your current loans and credit card balances. Do not close unused credit card accounts. Creditors were formerly advised to close unused accounts, but this advice is outdated, since leaving unused accounts open increases the amount of credit you have available and improves your ratio of available credit to used credit. Be especially careful not to close old accounts, since closing them may remove them from your credit report, shortening your credit history. You want as long a credit history as possible, in order to establish that you have been responsible with credit for a considerable time. If you take these steps, maintain your payments successfully for several months, and avoid taking on new credit card debt, in months your score should be markedly better.
As you can see, a credit crunch can be an ideal time to apply for new credit and new mortgage loans. Be the attractive would be mortgage holder the banks want to see, and you can get a markedly lower interest rate on mortgage loans. If you are what the banks are looking for, you can indeed benefit from even the worst credit crunch. Related Links Home equity loans | Mortgage rate | Home mortgage | Home loan | Equity loans |

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by: marciafreeman
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