Spring Lending Update for Frederick Buyers
Mortgage rates typically rise in the spring, with the increased activity of a spring market. Recently, the rates rose a bit, above 3.5%, but then with the recent economic news, the fell back down to 3.5%. See today’s rates. This spring lending update for Frederick buyers brings some good news.
Lending Standards Are Loosening… A Bit
Lenders who use mortgage programs from Fannie Mae, Freddie Mac, FHA or VA must apply standards from these institutions. However, each individual lender is free to apply additional requirements on top of those. These are called overlays.
Overlays might include higher credit scores, lower debt-to-income ratios, greater reserve amounts required, and others. When the mortgage crisis hit in 2007-ish, lenders began tightening up on standards with overlays. Many today believe some standards were a bit of an over reaction.
Recently, more and more lenders have been removing their overlays, because of the improving housing market. This is a positive development for borrowers. It also means that different lenders can have different standards for the same mortgage product.
Credit Scores Count
Even with overlays being removed, underwriters are still vigilant! Buyers should also be vigilant about their credit scores, their payment history and their amount of debt.
A good credit score is still the most important aspect of your ability to get a loan. Lenders have been extra careful since the lessons learned from the previous mortgage meltdown. The credit score, or FICA, is still the best way for them to ascertain the credit-worthiness of a buyer. It pays for buyers to understand their credit scores and to keep working to get the best credit score possible.
To see how different credit scores affect your mortgage rate, check out this free tool from MyFico.
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