Mortgage Info and Tools

One of the most important steps in the home buying process is to qualify for a mortgage. By meeting with a mortgage lender early in your home buying process, you will be able to determine how much home you can and want to buy and discuss the amount of money needed for the closing as well as the monthly payment for various purchase prices. The lender will advise you about the price range that you can qualify for and a prequalification letter or loan preapproval letter will be issued. The prequalification letter is just a brief look at your income, assets, and obligations to determine your ability to purchase real estate. PREAPPROVAL is much more valuable to you. This is where you will actually apply for a mortgage loan. The lender will look in detail at your income, assets, obligations, and credit to actually confirm your ability to purchase your new home. This PREAPPROVAL letter carries much more weight when it is included in any offer to purchase you will make.

As part of the loan qualifying process a credit report will be obtained along with your credit score. Both the credit report content and scores will be used to evaluate the risk level for your home loan. It is advisable to check your credit report regularly for accuracy. Incorrect information can be corrected, but does take some time.

During the 12 months prior to buying your home, the following tips will help you avoid mistakes that could affect your ability to obtain a mortgage:

+Do make all of your payments on time. No matter what kind of obligation, be sure to pay on time. Any late payments can affect your credit score negatively.

+Do keep all of your credit card balances at or below 50% of their high limits. This will assure that your credit scores are the highest.

+Do get pre-approved!! Don’t just get pre-qualified. Being pre-approved will make your home offer much stronger and will assure that you will be able to obtain the financing needed to purchase your new home.

+Do keep a paper trail of all of your deposits by making a copy of all checks received. Lenders are required to verify the source of all large deposits to be sure they come from eligible sources.

+Do save as much as possible as often as you can. The increased assets do make your financial profile look much more appealing to lenders and by saving enough you may be able to have a larger down payment.

-Don’t make any large purchases. Any large purchase such as a car, major appliances, or furniture will not only affect your credit score, but the resulting payment may affect the amount of mortgage that you can qualify for. Even if there is no payment required for a period of time, the future payment will be counted as a current obligation in qualifying for your mortgage.

-Don’t open any new credit cards or accounts, even if the account is “90 day same as cash”, “no payments for 12 months” . No matter what kind of account, your credit will be affected negatively with any new account.

-Don’t allow your credit to be pulled numerous times. Each time your credit is pulled, your credit score may be affected negatively.

-Don’t cosign for anyone on any type of account. This will have the same negative affect on your credit as if you applied for the account. And if any payment is missed or late, it will hurt your credit.

-Don’t quit or change jobs without contacting your lender first. Job stability is an important factor in evaluating your ability to repay the mortgage.