How Summer Credit Trends Affect Home Buying Power

Spring and summer are traditionally the season when you’ll find the most choices as a home buyer. If you’re thinking of buying a house this summer, it’s definitely time to check your credit report online .

While real estate experts say there will be plenty of new and resale homes in most parts of the country, lenders are still being cautious about approving mortgages. They’re holding borrowers to stricter standards than in the past, and that means your credit will need to measure up.

Educate yourself on the factors the credit bureaus use to develop your credit score, and check your credit before you talk to any lenders. Then, start reviewing your options, keeping these credit trends in mind:

Rates will continue to fluctuate

Mortgage rates are low right now, but it’s hard to predict what they will do. If you’re in a position to buy, it makes sense to take advantage of the low rates while they last. Only you can decide what type of mortgage makes most sense for you financially – 30-year fixed, 15-year fixed or an adjustable rate mortgage (ARM) – but keep in mind that ARMs mean your rate will change during the life of the loan. Consider how confident you are of your financial position a few years down the road before you commit to an ARM.

Foreclosures are still a factor

Industry watchers predict the foreclosure rate will remain brisk this summer, which, among other things, means lenders will continue to be very cautious about giving new loans. They’ll be checking a borrower’s credit reports with a critical eye, looking for the slightest hint that he or she might be a foreclosure risk. The information credit bureaus track, like payment history and amount of outstanding credit, is a good indication of a person’s risk level and lenders will carefully consider this risk.

Terms will be tight

None of this means you can’t get a mortgage this summer. People with good credit history have always been the front-runners when it comes to winning approval from lenders. If you’ve checked your credit report online and it looks good, you should approach your mortgage company with confidence. But be aware that lenders are tightening their terms, even for the best-qualified borrowers.

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