Many homeowners are waiting for the right time to refinance, and get a lower interest rate. In the past, those with good credit received praise from their mortgage broker when they made the initial purchase.
A lot has changed since that initial purchase and those that were receiving praise in the past may not get that same praise now.
A credit score of 620 or higher used to be good a few years ago. Since last August, a good credit score is considered 740 or higher. In the past any score above 700 was great, but to be considered great, the score needs to be near 800.
This means that some people who used to have great credit now only have good credit. These people now must either pay higher rates or make changes to improve their credit score.
Ironically, in today's market, even those with credit scores of 740 or higher are penalized for buying in a geographic market that is declining. Falling housing values impact all borrowers, regardless of their credit score.
All of these changes are because Fannie Mae and Freddie Mac had major losses last year. This caused them to redefine risk, and provide price adjustments for borrowers whose credit score is under 720.
Unfortunately, there is probably more bad news to come. There are many factors that will continue to impact lending practices. The benchmark will more than likely rise before it falls.
Don Wenner can offer you tips to help you refinance your home in the Lehigh Valley. Visit donwenner.com for the best properties in Bethlehem, Easton, or Allentown.
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