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Lending Tips

Review your credit as early as possible when considering a new home.  76% of consumer credit reports have inaccurate information on them.  These errors can affect your interest rate on a new mortgage or even your qualification.  While some errors are easier to fix than others major errors can take as long 60 days or more to correct. 

Eva Morrow

Generally a higher credit score qualifies you for better mortgage terms.  Improve your credit score, pay down debt, set up payment reminders to pay bills on time.

Lower your debt to income ratio.  Your total monthly debt compared to your overall income is a key component in what a lender will qualify you to borrow.  Pay down any debt you can if a mortgage is in your future.

Get a “pre-approval” rather than “pre-qualification”.  A pre-qualification is often seen as the first step in the mortgage process.  With pre-qualification, you'll supply an overview of your financial history to the lender, including income, assets, debts, and credit score.

A mortgage pre-approval is very similar, but it usually requires documentation and verification of your income, assets, debts and employment. Some lenders define these terms differently be sure to check with your lender to see how they view these terms.   The best pre-approval will actually take the borrower through the underwriting process with the actual property “to be determined” or “TBD”.   This process puts the borrower in the strongest position when it comes to making an offer in a competitive market.   This process can put your offer on par with a cash offer.  This is a huge advantage.

Self-employed borrowers should consult a qualified and experienced lender with lots of time in the industry as soon as possible.  Often self-employed borrowers take advantage of tax strategies that lower their qualifying income.  It is important you consult with a lender who is experienced in working with self-employed borrowers and has multiple lending programs that will optimize your qualification and how much you can actually qualify for.

Getting a mortgage is a major financial event.  It is to your benefit to check your credit with a qualified lender.  Often consumers are too worried about their score dropping because of a hard pull on their credit. Your FICO score can range from a low of 350 points to the highest score of 850.  In most cases a hard credit inquiry will lower your score 4-6 points, which isn’t much at all when you consider the wide range of points possible.  Although you should be responsible and never allow your credit to be run several times or without good purpose the benefits of having a good lender looking at this ahead of time far out weight the 4-6pts you may temporarily lose.

Eva Morrow

Interest rate isn’t everything.  You deserve a fair and competitive market interest rate. Some online banks you may have never heard of advertise rates lower than more reputable lenders.  Often the reason the rates are lower is because everything about these companies is less such as individual experience, support, and staffing levels.   Even if you’re the most credit worthy borrower many things can come up in a transaction such as title issues, appraisal issues, tax issues. These lenders do not have the experienced staff to solve these problems.  Your loan can be quickly denied for the simplest of reasons. You get what you pay for. Don’t lose your dream home because you tried to cut corners.  If your lender can’t meet with you in person if needed than you shouldn’t be doing business with them.

The greater your down payment percentage the more money you will save. This is obvious, but in certain cases it may be more prudent to put down less and act now.   A good lender should be able to give you solid advice for each scenario that makes sense to you.

Eva Morrow

Interest rates can change on a daily basis either improving or declining.  Work with a lender that knows the economic forecast and is able to lock your interest rate on the date and time most beneficial for you.

Job changes can affect your qualification consult with lender before making a job change if a new home is on the horizon.

Be careful of omitting information on your mortgage application.  The databases that lenders use and have access to are much more powerful than just what appears on your credit report.

Do not make any major purchase during the mortgage process.  Do not open any new credit lines during the mortgage process.   Do not purchase a new car during the mortgage process. Lenders will be notified automatically during the mortgage process without a checking your credit. Your loan can be cancelled at any time during the mortgage process even if you have a “clear to close status”.  Consult your lender before attempting any of these events.  Your lender wants you to succeed.

Eva can help you find a lender and a title company who will fit your needs. Give her a call today for her list of recommendations.