New mortgage rules aim to prevent risky loans

New mortgage-lending rules take hold Friday that federal regulators say will guard against the risky lending practices that fed the housing bubble, which led to the greatest collapse in U.S. home prices since the Great Depression. For most home loan borrowers, the change will have little or no impact on whether they can actually get a mortgage, experts say, but they may have to show even more proof that they can afford one. Here’s a look at the rules, what they do and why they matter.

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Credit ratings

No matter where you live or even if you do not invest in real estate or common equities, your credit score is essential to your future. The ability to borrow money (such as for a mortgage) and to pay it back is not just for the very wealthy but for everyone. It has been said that having bad credit is better than no credit to a lender because there is at least a track record for them to gauge. A good credit score is essential to low interest loans and increasing the ability to purchase items.

If you have a credit card, that is one way that your history speaks for your abilities to pay money back.  The good news is that even if you have a poor credit rating, it can be improved upon with some assistance from a mortgage broker who specializes in investment properties.

Each country around the world has its own credit agencies and ways of calculating credit.  Although I do not have them all at my own disposal, here is a partial list which can help you get started.

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Once your credit is on a solid footing, you can start the process of getting qualified for your first or next piece of real estate.

Dirty Mortgage Words

There are lots of dirty words in the mortgage business, some are consumer-centric, some are industry terms, and all of them are dreadful. Words like foreclosure and terms like short sale have become commonplace in our everyday vernacular and as dreadful as they may be, there are others that strike fear in the hearts of mortgage industry people. My approach to mortgage originating, my model if you will, is ever evolving, in large part because I never want to see or hear dirty mortgage words and have to deal with the dreadful consequences they announce.

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