Major economic growth has happened within the last few years.  This growth has allowed the housing market to build back up from the Great Recession – bringing home prices up as much as 13% in the past year!

This has help to aid many underwater homeowners to the surface – that is, if they have been able to sell their homes.

Home prices are going up, equity is increasing, but lenders are becoming stricter than ever! Mainly when it comes to credit scores on conventional loans.

Lenders want to ensure their safety, that is, they want to make sure that if they lend to you they will not take a loss because you were unable to make your mortgage payments on time.  Therefore, they take a look at your credit history to make sure you are reliable for a loan.  Nowadays, if you have a less than perfect credit score most lenders will turn you away – scared that you will not be able to fulfill your mortgage obligations.

And so, home prices are on the raise, it would seem as though the economy is too.  But that isn’t the entire truth – yet.

Because of uncertainties lenders have about who they lend to they have begun to become stricter about who they let borrow.  They adapted their guidelines and changed the minimum credit score needed to be eligible to get a mortgage – it has risen.  This has caused many potential mortgage borrowers to be turned away; people who used to be seen as creditworthy are now being turned down for mortgages.

The U.S. Government (FHA and FHFA) has a problem with this trend with the large banks.

The government believes that creditworthy individuals should be able to take out a mortgage and that the minimum credit score should not have changed.  Individuals with good credit, before many lenders raised the minimum credit score needed, should be able to get loans.

As of this month the U.S. Government is making changes to strengthen the present housing market, and to build and strengthen the future economy. The FHA has committed to helping individuals receive loans who meet their credit guidelines.  These loans can be given without the distress of penalty for banks and lending institutions.

According to Ellie Mae the average credit scores on loans closed in April 2014 was 726. Many lenders have increased their minimum credit standards to attract only high credit borrowers. Riverbank Finance LLC has used this as an opportunity to offer loans to the undeserved lower credit score borrowers offering FHA loans down to a 560 credit score.

Since this, some lenders have reduced their minimum credit score needed for eligibility, therefore, more people will be eligible for mortgages.

Hopefully this will help to make the economy strive!

More Information on FHA Mortgages

For more information on low score FHA mortgage loans request information below or call Riverbank Finance LLC at 1-800-555-2098.

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