Avoid mortgage trouble by understanding the credit market
Nov 20, 2011 Walt Wojoiechowski
It's no secret that the housing sector is in the doldrums right now. Sky-high foreclosure rates and mortgage defaults have prompted some analysts to prolong their recovery projections through this decade. The housing market is perhaps the most fundamental obstacle to stronger economic recovery. However, new research from the National Association of Realtors suggests many of the problems facing the market, particularly indebted homeowners, could be avoided through a firm understanding of the credit system. According to the report, 18 percent of NAR members have reported contract failures in recent months, roughly double that of recent years. Failures result from fewer mortgage applications, depreciated home valuations and other factors. "We need to get back to reasonable lending standards," said NAR president Ron Phipps. "That's why NAR, as the leading advocate for homeownership and real estate issues, is working closely with policymakers and lenders to ensure that mortgages are available and accessible for qualified buyers and real estate investors." Credit scores are the leading indicator of homebuyers' mortgage worth, underscoring the need for lenders to make more informed credit decisions and for consumers to educate themselves on personal finance.