4% Interest Rates & a Low Credit Score?

In today’s real estate market, historically low interest rates seem to be the norm rather than the exception. This monetary policy is not helping new home construction, refinancing, nor increasing existing home re-sales. What is the problem?

1. Many people that could qualify for refinancing at a lower interest rate can’t because their home will not appraise.

2. Many homeowners have equity in their home but do not have the income to support refinancing.

3. We have discussed the lack of family formations, high unemployment and fear in the marketplace. All which contribute to the spiraling down of the housing industry.

I believe that if the mortgage interest rate was lowered to 1%, you may see an uptick in refinancing but this will not create new jobs nor significantly help the housing industry out of its downward spiral.

4. We also have many people able and willing to buy a home but they can’t because the rules have changed and it has become more difficult to obtain a mortgage. If their credit score is low, they will not qualify for a loan --- even with stable employment.

If you have a low credit score, you can help yourself by using the following guide:

• If you don’t use credit, you can’t raise your credit score
• Reduce or limit your credit card balance to a MAXIMUM 20-30% of the credit
• Pay down any credit card that is over 30% of the maximum credit limit before others. This will increase your credit score
• Having big balances on your credit cards impacts your credit
• Stabilize your finances to fix your credit
• Do not pay credit card interest for a great credit score. NOT carrying a balance is helpful to your finances and your credit score
• Equifax, Experian and TransUnion are the three credit bureaus. You should check your credit report to make sure it is correctly reported. Your credit score will suffer if the information is incorrect.
• You can get your credit report once a year for FREE. Go to the government run site AnnualCreditReport.com