23
Mar
By support
Home Mortgage Tips

5 Steps Towards a Better Credit Score You Can Take Today

5 Steps Towards a Better Credit Score You Can Take TodayWhen it comes to finding the best mortgage, your credit score is a major determinant as to the kinds of rates and conditions you can get. Lenders quite understandably want to manage their risk. But for a number of potential homeowners, these practices and policies can be a barrier to home ownership.

The good news? If your credit score isn’t great, you can easily improve it and get better lending terms. Here are five steps you can take right now to give your credit a boost.

Get Your Annual Credit Report And Dispute Errors

Simply disputing errors on your credit report is one of the easiest ways to give your score a boost. The FTC says that 1 in every 5 Americans has errors on their credit report that have an impact on their score. By simply disputing errors on your credit report, you can give your score a small boost almost overnight.

Miss A Few Payments? Talk To Your Lender

If you’ve missed a payment and it’s more than 30 days past due, chances are your lender has already reported the missed payment. Once a missed payment is on your credit report, the fastest way to remove it is to talk to your lender. Get a written and signed agreement that if you pay the overdue balance, they’ll report the account as “paid in full.”

Ask For A Credit Increase

Your credit utilization ratio – the amount of credit you’ve used compared to the total amount available to you – makes up 30% of your FICO score. In general, experts say that using more than 30% of your available credit can harm your score. If you can’t immediately pay down your debt below that 30% threshold, one great way to improve your credit utilization ratio is to ask for a credit limit increase.

Get A Co-Signer To Help

Having someone with good credit co-sign your lending agreement is a great way to improve your credit. When you get a co-signer for your credit card or car loan, the better quality credit line may help boost your score. Just make sure you stay on top of payments – otherwise both you and the co-signer will see your credit scores fall.

Keep Good Debts On Your Report

While it is important to review your credit report and have any negative items removed, you’ll want to ensure that any positive entries – debts you’ve paid in full – stay on the report. When your credit report shows debts as paid in full, your score increases because it shows that you’re a responsible borrower.

Improving your credit score doesn’t have to take years. These five strategies can help you to boost your credit and qualify for better mortgage loan terms. Contact your local mortgage professional to learn more.

15
Mar
By support
Home Buyer Tips

3 Tips and Tricks to Make Mortgage Pre-Qualification Easy

3 Tips and Tricks to Make Mortgage Pre-qualification EasyIf you’re planning to buy a home, you should know that the mortgage pre-qualification process is the first in a series of steps that eventually lead to home ownership. A pre-qualification is different from a pre-approval – the pre-qualification meeting is simply you and your lender hashing out how much you can afford to spend on a property. But once you’ve been pre-qualified, it makes the mortgage process easier.

So how can you make the pre-qualification quick and painless so you can get on with your house hunt? Here’s what you need to know.

Get Your Debts In Order

One of the major questions during the pre-qualification meeting will be your credit history and debt payments. Your lender will use your social security number to look up your credit history and determine how your income and current monthly debt payments stack up. If you have a high amount of debt, you may want to do everything you can to pay it down to qualify for your dream home. However, it’s important to go over the details with a trusted mortgage professional for specific guidance here.

Chart Your Income And PITI

Your lender will use a specific ratio (the PITI to income ratio) to determine how much it’s willing to lend you in order to buy a home – and that’s why, if you calculate this ratio beforehand, you’ll know what to expect going into the meeting. PITI stands for “Principal and Interest, including Taxes and Insurance”.  It refers to the four components of a standard mortgage payment. Your PITI ratio, often referred to as the “front end ratio” then, shows how much of your income goes toward your monthly mortgage payment.

To calculate your front end ratio, simply divide your gross monthly income by your monthly mortgage payment (your PITI amounts plus your mortgage insurance). Most lenders will want to see a PITI to income ratio that is under 28%.

Build Up Your Savings Account

It’s important that you have some savings over time that can be used for a down payment, closing costs and reserves.  Although there are some very low down payment options, having a decent balance in your savings account always helps you qualify easier for a mortgage.  

Closing costs are the fees associated with getting a mortgage loan.  These can also be negotiated to be paid by the seller if you choose.  But once again, they aren’t required to make that concession, so it would be wise to move toward saving for those expenses. 

Reserves are the amounts that will need to be collected to cover your taxes, insurance and mortgage insurance on the property.  These will fund the “reserve” in your escrow account so you’ll always have enough to cover those expenses as they come due throughout the year.  Your mortgage company keeps this money for you and pays the expenses on time as well.

Pre-qualifying for a mortgage can seem like a daunting process, but it’s actually quite simple. Your mortgage advisor can help you to understand what goes into a pre-qualification. Contact us today to learn more about how pre-qualifications work and how you can get started.

09
Mar
By support
Home Buyer Tips

It Isn’t Always a Clear Road after Pre-approval: 4 Reasons Why Your Mortgage May Be Denied

It Isn't Always a Clear Road after Pre-approval: 4 Reasons Why Your Mortgage May Be DeniedSo you’ve been pre-approved for a mortgage – great! You’ve taken the first step toward becoming a homeowner. But before you start picking out china patterns, you’ll want to keep in mind that a pre-approval isn’t the same thing as a mortgage agreement. There’s still no guarantee that you’ll actually get a mortgage.

But why would a lender deny a mortgage after pre-approving a borrower? Here’s what you need to know.

Sudden Changes In Income Or Employment History

A number of mortgages will require borrowers to have consistent employment for a certain length of time. If you apply for an FHA mortgage, for instance, you’ll be obligated to have an employment history dating back at least two years. Any gaps in your employment history will require a written explanation that your underwriter will need to approve.

If you switch career fields while in the process of buying a home and it has a significant impact on your income, your lender may deny your mortgage.

Credit Mismanagement After Pre-Approval

Lenders like to see consistency – so if your credit score suddenly drops after you’ve been pre-approved for a mortgage, it sends up a red flag. Even something as minor as a late payment on a cell phone bill could affect your credit score just enough to cause your lender to deny you. Pay extra attention to your bills throughout the home buying process, and make sure nothing slips past you.

Taking On More Debt In The Interim

A number of buyers will take on more debt after they’ve been pre-approved for a mortgage. Although it may be tempting to get a new car to go with your new house, getting a car loan will change your debt-to-income ratio and cause your lender to think twice about how responsible you are. If you’re in the process of buying a home, hold off on any other major purchases until after the deal has closed.

An Unsatisfactory Bank Appraisal

Sometimes, your mortgage can be denied for reasons that have nothing to do with you. Some lenders will only issue a mortgage if the property value of the house in question is appraised above a certain level. Others will deny a mortgage if the home requires roof repairs, electrical work, or a new heating system.

You’ll want to check with your lender to see what home conditions could be cause for denying your mortgage application.

Getting approved for a mortgage is a convoluted process at best, but a mortgage advisor can help you to navigate the approval process with ease. Contact your local mortgage professional for more tips on how to ensure you get approved.