Builder confidence up for third straight month

The National Association of Home Builders/Wells Fargo Housing Market Index for December showed builder confidence in the market for new single-family homes has increased two points, marking the third consecutive month of increases. The housing index has also reached its highest point since May 2010.

“While builder confidence remains low, the consistent gains registered over the past several months are an indication that pockets of recovery are slowly starting to emerge in scattered housing markets,” said Bob Nielsen, chairman of the NAHB. “However, the difficulties that both builders and buyers continue to experience in accessing credit for new homes are holding back potential sales even in areas where economic conditions are improving.”

Mortgage rates continue to hover at record lows, but many borrowers are unable to take advantage of the low rates when applying for a mortgage or refinancing. According to Reuters, borrowers with a low credit score will likely pay a higher rate than the low average on their home loans due to stricter lender requirements.

Developing a strong credit score is key to acquiring an affordable loan, the news source states. A credit score of 740 or above should guarantee a borrower won't be faced with surcharges throughout the loan process.

The lower the credit score, the higher the mortgage rate offered by lenders, according to the news source. For consumers looking to refinance, a low home equity can also hurt available rates, as some lenders will add three percentage points to rates if these numbers are unfavorable.

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