060. Not Qualified for Mortgage Because of Low Credits Scores

Hello everybody and welcome to another episode of The Reside Daily Bite; I’m your host, David Doucette and today, I want to talk to you about an article that came out of the Orange County Register last week, entitled, “1 in 3 Unlikely to Qualify for Mortgage“.

So, what they’re saying is, 1 in 3 people will not qualify for mortgage and it was in an analysis that was done by Zillow; and they mentioned some credit score numbers. But what’s interesting is, borrowers with credit scores under 620, who requested purchase loan quotes for 30-year fixed, conventional loans were unlikely to even get a single loan quote on Zillow Mortgage Marketplace; even if they offered a relatively high downpayment of 15-25%.

According to MyFico.com, nearly 1/3 of the Americans, or 29.3%, has a credit score that low. Very interesting. And then it also says, not surprisingly, the analyst found that the lower interest rates went to borrowers who are among the 47% of Americans with primo credit scores of 720 or higher (So 720 or higher, you have a great credit score). And they give a little box here, if you’re above 720, your interest rate could be at 4.3% versus if it’s 620 to 639, you’re at 4.9%. So, a difference of 0.6% – that’s a lot. Let’s see, what Stan Humphries, Zillow’s Chief Economist said, “We’re getting in an area of historically low mortgage rates, reaching levels not seen in decades. Coupled with 4 years of home value declines, homes are more affordable than we’ve seen for years. But the irony here is that so many Americans can’t qualify for these low rates, or can’t even qualify for a mortgage at all”.

So, the lesson in all of these is making sure you talk to your lender -the very first thing you do if you’re considering buying a home. You want to know exactly how much you can afford based on your current income and the money that you earn. So, very first step before you even go out start looking at homes, looking at the right price range, make sure you are working with your lender. If you need any lender referrals, I have 3 very good lenders that I work with.

That’s going to do it for The Reside Daily Bite today, my name is David Doucette. Thank you so much for checking us out.

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