Good credit is critical when it comes to obtaining the best interest rates and tea on a mortgage. Here are some credit dc and don’ts when looking for a mortgage DON’T change your financial picture after you close. Call your mortgage professional when in doubt!
Thinking of buying a home?
- Down Payment
Generally between 5-20% of the purchase price - Income Verification, Credit History & Asset Documentation
- Impartial Third-Party Appraisal
Your Lender Needs this to Verify the value of the house you want to purchase - Stable Income and Good Credit History
You will interact with various professionals during the homebuying process, all of whom are valuable resources & perform necessary roles.
Steps to Take:
- Find Out Your Current Credit History & Score. You don’t want to start out with any surprises.
- Start Gathering All of Your Documentation: Income Verification (W-2 Forms, Tax Returns, Employment), Credit History & Assets (such as bank statements to verify your savings)
- Contact a Professional to help you develop a spending plan & determine how much you can afford.
- Consult with Your Lender to Review Your Income, Expenses & Financial Goals to determine the type and amount of mortgage you qualify for.
- Talk to Your Lender About Applying for a Mortgage & Getting a Pre-Approval Letter. This letter provides an estimate of what you might be able to borrow. (provided your financial status doesn’t change) & demonstrates to home seller’s that you are a serious buyer.
The Process
- Choose a Full-Time Experienced Realtor. The first step in the home-buying process is to find an agent you feel comfortable working with on what will likely be the largest financial decision of your life.
- As a local Realtor®, Marion Romano has experience working with mortgage brokers, title companies and attorneys. Choosing someone to handle the financial part of the home-buying process can feel like a scary step, but choosing a lender that’s competitive on rates, communicative, and available is key.
- Once you know what your purchasing power is, talk with Marion Romano about your ideal home. Come up with a few “musts,” as well as “wants” you’d ultimately be willing to compromise on. Think bigger than just the color of the kitchen or inground pool, this can be added over time.
- Apply for a mortgage. Having a pre-approval letter in hand when you’re ready to purchase a home makes your offer stronger and more appealing to sellers. If you’re pre-qualified, now is the time to get approved through your chosen lender.
- The due diligence process usually includes getting a home inspection to make sure you haven’t missed any hidden issues that you can’t see during your house tour. If issues are found, contact Marion Romano and your attorney to find out what your options are.
- Get final mortgage approval. Work directly with your lender to obtain your unconditional mortgage commitment and final clear to close.
- Once all of the above steps are completed, you’ll be on your way to the closing table. Marion Romano will arrange your final walk through and your attorney or settlement agent will guide you through closing process.
- You are officially a homeowner and it is time to move in! Kick back, relax and enjoy your new home with friends and family, Congrats!
Dos & Don’ts During the Loan Process
Lenders will update credit prior to closing!
Do Stay Current On Existing Accounts.
One 30-day notice can cost you.
Do Continue To Use Your Credit As Normal.
If it appears you are changing pattern, it will raise a red flag and your score could go down.
Do Call Your Loan Officer Below.
Cali before making any address or credit change that may affect your score.
Don’t Apply For New Credit.
Every time you have your credit pulled by a potential or lender, you can lose points from your credit score. This includes co-signing for a loan.
Don’t Pay Off Collections Or Charge-Offs.
If you want to pay off old accounts through escrow. Request a letter of deletion from the creditor.
Don’t Close Credit Card Accounts.
If you close a credit card account, it may apply your debt ratio has gone up. Closing a card will affect other factors in the score, including cret history.
Don’t Max Out Or Over Charge Credit Cards.
Try to keep your credit card 30% below their limit during the loan process. If you pay down balances, do it across the board. Don’t Consolidate Your Debt. When you consolidate all of your debt onto one or t credit cards, it will appear that you are maxed out on that card and you will be penalized.
NO MAJOR PURCHASES, Cars, Boats, etc.
