Credit Check – Even FHA Guidelines Are Tougher

Lancaster County PA Real Estate FHA loansIf you’re one of the many whose credit score took a hit following the housing bust a few years ago, you’re no doubt in credit rebuilding mode.   Credit score drops went from 20 points to 100 points or more following the bust, and the result has been that mortgage approval guidelines have gotten more stringent.

Even new FHA (Federal Housing Administration) loans are averaging credit scores of 700 or above.   The FHA has long been the safe haven for first time home buyers, buyers with modest incomes and those with not-so-great credit histories, but now even they are tightening the proverbial belt.

So what does this mean for you, as a home buyer or home seller?

Sellers:  Patience is a virtue.  It’s also a plain reality that we have to deal with whether we like it or not.  The real estate process typically takes longer now with the tougher guidelines for mortgage approval, which makes an already competitive market even more competitive by reducing the number of actual qualified buyers.  Control what you can control…make sure your home’s appearance is as competitive as possible with a new home and that appliances and any necessary repairs are taken care of.  This will remove potential contingencies that could delay or otherwise hurt the sale.

Buyers:  If you’ve got good credit, get pre-approved.  Not pre-qualified, but pre-approved.  With average credit scores for approval – even FHA approval – trending higher, get your credit rating in order.  Paying bills on time consistently is crucial to improving your credit rating and maintaining a good credit rating.  Know your credit standing and commit to buying within your means.   Sometimes the house we really want may be beyond our current financial means, but the right Lancaster county real estate professional can help you find the best value for your money.

Homeowners In General:  Make sure you pay your mortgage on time.  Falling behind 30 days or more on your mortgage can cost you anywhere from 70 – 110 credit score points (i.e. 750 can become 640).   A loss like this can take up to 3 years to recover.  Make sure your credit is in the best shape it can be, especially if you see a potential move in your not-to-distant future.

For more tips and hands-on help with Lancaster County PA real estate , give me a call at (717) 413-2749.


~ by bobenglishsellshomes on December 15, 2011.

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