Keep Your Eyes On the Prize: Home Mortgage Shopping!
Here in Winter Park, Florida, at Palm State Mortgage Company, we are seeing more and more renters transformed into homeowners.They are taking advantage of mortgage rates that are still low in an atmosphere of an economy that continues to improve.
While new mortgage shoppers are sometimes shocked at the complexities of the home mortgage loan application, the Palm State experts are here to explain every step. When you are in your new home, you will appreciate the legal and financial clarity with which you have made your decisions. Keep your eyes on the prize during the mortgage procedures, and you will decide the meticulous paperwork was worth the trouble.
This week we bring you some keys, not house keys or car keys, but credit keys that unlock your financial future. John Ulzheimer of Vantage Score says, “before you think about applying for a mortgage loan, there are a few things to keep in mind so you don’t accidentally blow your chances of being approved.”
Key #1: Everything Will Be Reviewed:
Palm State wants you to know that all of your credit reports will be reviewed. Sometimes new home mortgage shoppers believe the application is like applying for a car loan or a credit card. For cars or cards, the lender will usually access only one credit report. They normally select only one from any of the three credit reporting companies: (CRCs), Equifax, Experian or TransUnion.
Ulzheimer reports, “In the mortgage environment, however, the lender will likely pull credit reports from all three CRCs.”
Key #2: Partners Will Be Reviewed:
Are you buying a house with a spouse, family member, friend or business associate? Remember, if you’re jointly applying for the home mortgage, then three credit reports will be checked in that person’s name as well.
Key #3: Please Preview Your Reports:
Please realize, if you have errors or negative information on any of your credit reports, it stands to reason that the mortgage lender is going to notice them. So, review your credit reports when you are ready to house-hunt.This will give you the opportunity to correct errors.
Likewise, you can solve any credit situations that might destroy your chances for loan approval.
Find out more about your credit profile and access your credit reports for free once every 12 months at www.annualcreditreport.com.
Key #4: Notice the Middle of the Road Score:
Experts say, “When a lender pulls three or six credit reports, it also will see three or six credit scores. Credit scores are calculated on an individual credit-report-by-credit-report basis, so six credit reports means six credit scores.”
The surprise factor in the mix is that “it is highly unlikely the scores from all three CRCs will be the same at any given moment.”
When the time comes for the mortgage lenders to decide on which score(s) to base its loan decisions, the normal practice is to choose the middle numeric score for each applicant.
Then the lender will set appropriate loan terms, including your interest rate. Thus, if your reported scores are 700, 680 and 675, the lenders will ignore the high and the low numbers, and your loan will be based on the 680.
Key #5: How To Improve The Scores:
We keep this key very simple at Palm State. In the weeks and months before your loan application, pay down your credit card debt. Keep those balances low! This will improve all the scores. Read more about how to use credit cards at this helpful source.
Key #6: For the Lender’s Second Look, Avoid New Debt:
Do not make new debts until you have closed. Remember, just because you have been approved, does not mean you won’t be examined again. “In 2010 Fannie Mae introduced its Loan Quality Initiative (LQI), which is meant, in part, to “ensure that the loan meets credit standards.”
This legislation allows lenders to take a second look at your reports and scores right before closing. See more about in-depth quality investigation at this online resource.
So the time period just before closing on a home loan is not a good time for new cars or big credit card charges. Lenders will note changes in your credit quality and could decide to cancel your loan.
Palm State Mortgage Company points out to all its home mortgage shoppers that this is a “time of great scrutiny on borrowers’ creditworthiness.”
Use our six keys above to unlock the mysteries of your credit profile before you apply for a home loan.
When you go on a date or step out into society, you always want to look your best. Likewise, when you court lenders for the best mortgage deal, you want your application to look financially attractive.
Thank you for reading the Palm State Mortgage Company Blog today, and come back again for more practical tips about finding the perfect loan situation to transform you from a renter to a homeowner!