"The Biggest Mistakes Consumers Are Making On their Mortgage Loans."
Reading this report could make the difference in your mortgage loan being approved
or denied..."if", you use it. Getting a mortgage loan can be difficult enough, and
by learning these mistakes you will be able to make your mortgage experience a little
easier - and with less stress.
Not knowing your personal credit history
One of The first questions I ask when working with a new client is: " How is your
personal credit?", and I almost always get the same response..."Good." Then, when
I pull the credit report, I often find that the credit is not so good. In fact,
sometimes it's downright "horrible". This can cause a real problem if you are buying
a home and have already signed a real estate contract. If you have already signed
a contract then you probably have made an earnest money deposit. So you may have
money already at stake.
How To Avoid This Situation:
Know your credit history and know your credit score. There are several factors that
determine your personal credit score. The Major Factors are:
1) How you pay your bills each month - every time you pay pay a bills over
30 - 60- 90 or 120 days + late that is reported to the credit bureaus and drops
your score. (sometimes it drops significantly).
2) The Length Of Your Credit History - believe it or not lack of credit history
is viewed the same as "bad credit history"...(or sometimes worse)
This is because you have not had the chance to demonstrate that you can pay back
loans in a timely manner yet. There are loan programs that you can apply for with
limited credit history - (call me for details- 970.980.3579)
Credit Inquiries and New Credit Accounts
Every time you apply for credit - (Car Loan, Home Loan, Credit Card, Department
Store Credit Line). Any time a company is looking to extend you "credit" they typically
do a credit check! Too many credit checks in a short amount of time can usually
drop your credit score. You may pay your bills on time, but have had your credit
checked many times and your credit score will suffer. In addition to the "inquiries
- new open accounts in a short period of time can also have a negative impact on
your credit score. To ensure you are prepared to buy or refinance a home, it would
wise to avoid applying for and opening new credit accounts prior to applying for
your home loan.
Credit Balances Too High
Carrying high balances on your Credit Cards or having your cards maxed out - has
a negative impact on your credit. This tells the creditors that you may be a "high
risk", and this typically drives the credit scores down.
Although there are other factors that can contribute to your credit score - these
are the basics. It's important to know where you are with the above items. The credit
reporting system is somewhat a "mystery" how ever - I have seen a LOT of credit
reports, and I can tell you that typically if you have a established credit history
with no late payments, very few inquiries and low credit balances the credit report
reflects a good score!
To find out if you Credit Qualify for a new home loan, or if you are in the process
of shopping for a low interest rate - call me today at 970.980.3579.
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