Yes, in this new market, a great credit score is king. However, when the market was in the height of the frenzy you would often hear: No Credit-No Problem! Five years ago a monkey with an address and a social security card could get a loan. But it's different now: No Credit-No Way!
Unfortunately for the hundreds of thousands of Americans who got caught in the middle of the market meltdown, there is little chance of getting another mortgage today. Tomorrow, however, is another story.
If you are coming out the other end of the financial meat grinder, trying to buy again after walking away or short selling your home, there is some hope.
- Short Sale Survivors: If you succumbed to a short sale, according to the new guidelines, you will have to wait approximately two years to qualify for a Freddie Mac or Fannie Mae or FHA loan.
- Foreclosure Survivors: If you walked away or went through foreclosure, you will have to wait at least five years to apply for one of the government-backed mortgages.
Many banks, however, may not be quite so forgiving. There may be more of a cooling-off period before they jump back into the mortgage business with you. But that will be up to the individual banks. Just be prepared for a cold shoulder for a while.
What if You Don't Have Any Credit?
This will be a hurdle to jump over if, for whatever reason, you lack a credit history or don't have any credit at all. The solution? Start a history now by obtaining a credit card of some sort. If you lack credit because it's been in your spouse's name, then get on the phone and speak with your credit card companies to see what they can do for you. You'll want to have at least one card in your own name. If you must apply for credit, do so. Even if you're the type who pays your bills every month with cash, you can still keep the same habits and pay for your credit card bills in full every month. Having credit doesn't mean you have to actually use your credit. It just means you've been given the responsibility of having access to credit, which is what lenders want to see.
Michael Corbett is Trulia's real estate and lifestyle expert. He is also the host of EXTRA's Mansions and Millionaires on NBC. In addition to his regular segments on ABC's The View and Fox News, he is a national best selling author with three critically acclaimed real estate books: Find It, Fix It, FLIP IT!; Ready, Set, SOLD! and Before You BUY! His years of experience in buying, renovating, and selling homes have made him a sought-after nationally recognized real estate expert.