Being pre approved for a mortgage before house hunting will make the process go faster and can save you money. Your real estate agent will insist you apply for and receive a pre approval before starting to look for homes. It will save your agent time, keep you on the right track to complete the purchase process.
1. Application – You can apply on line, over the phone, or meet in person with a mortgage loan officer. The process is simple and easy 20 to 30 minutes and they should have all the information necessary. Within 24 hours you should have a pre approval sometimes it only takes 1 or 2 hours.
2. Credit Report – With your social security number, full name, and address all of your past financial is complied and rated. The higher the score the better a 750 score and above your at the top of the list, 680 and above you are in the game but may have hoops to jump through for a better interest rate, below 650 you can still get a mortgage usually at a much higher interest rate.
3. Work History – 2 years of a steady work history, with the same company is best in the same industry is still good, continually changing jobs and industries is not good for your credit rating. Your work background should show a steady income which predicts future ability to pay. Your work history also indicates to banks and mortgage companies that you are stable and a good bet for them.
4. Payment History – Any loan, credit card, rental, or payment contract will report when you are late on payments. A consistent history of late payments on any loan could put you out of the game for buying a home. You can get back in by changing your habits and making payments on time over a period of 6 months, 12 months or longer will be necessary to prove you are worthy again.
5. Current Loans – All loans where you are currently making monthly payments including credit card balances are in the calculation along with your new mortgage payments of how much you can safely handle each month. You maybe required to payoff all your credit cards and loans before you will receive the mortgage loan.
6. Student Loans – This seems to be the forgotten loan the government insures most of these low interest programs and only puts minimal effort into collections. It will show up on your credit report in the past when you bought a car, major appliance, or leased a property it was not a big concern. With a home purchase everything is a big concern and this could slow down or stop you from buying a home. You will at minimum be required to bring this current you may be required to pay it off in full.
7. Property Ownership – Owning a house or car or boat with no loans is a good thing these are all assets and add to your net worth. It is much better to own something out right than it is to be making monthly payments where you are still in the purchase process.
8. Credit Cards – The number of credit cards, amount of credit available for you to use is also a factor. Your ability to pay your mortgage is based on what your current payment requirements are. Car loans, credit card payments, student loans are all added to the monthly calculation. When those totals exceed certain parameters you may not be able to buy the home of your dreams because you will be limited in the amount a bank or Mortgage Company will extend to you.
9. Defaults and Judgments – Defaults, Judgments, or Liens if any business that you own or have owned or if you personally have had court filings and judgments entered against you or a company you own, you will need a detailed explanation and proof of release before you will get any mortgage loan. If you don’t have any copies of the releases you must go to the county court for copies. If you have paid off the judgment and it was never recorded which is a very common problem, in this case hiring your own attorney may be the only way you can have that process completed and corrected.
These are the major and very obvious hurdles. Others like have a relative with the same name comes up often especially if their credit is bad or that they have a lot of cards that show up as yours. Or a new big one is identity theft will take a lot of work on your part and that of your creditors to straighten out so that a bank or mortgage company will accept the results. Start early to clean up any of your problem issues before you make your application it will save you time and money.
Bill Carey with over 30 years in real estate sales, investments, and home building offers a unique perspective to the buying and selling process of residential real estate for F*R*E*E consumer information and reports log on to http://www.CharlotteNCExecutiveHomes.com and see “Insider Real Estate Secrets Revealed" . . . a must-read for Home-Owners and Renters! It's a F*R*E*E 12-lesson e-course covering more than 20 topics exposing the realities behind buying and selling a home. It Could Make(or Save) You Thousands of Dollars
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