Financing Your Purchase
There are certain “Do’s and Don’ts” which may affect the outcome of your loan request. These remain in effect before, during and after loan approval up until the time of settlement when your loan is funded and recorded. Many times credit, income, and assets are verified the hour before you have signed your final loan documents. Here is a list that you should comply with:
MAKE SURE THAT YOU DO NOT
Do any of the things that may alter your credit and may risk you obtaining your loan. Also, these things may put you in default of your Sales Contract, may put your ESCROW deposit at risk, and may put you at risk of being sued.
(1) Quit your job or change jobs. If this is likely, consult with your loan officer and call this office should this occur.Allow anyone to make an inquiry on your credit report except your lender.
(2) Apply for credit anywhere else except with your lender. This causes more “hits” on your credit rating which can reduce your credit score.
(3) Change bank accounts or transfer money within your existing accounts.
(4) Co-sign for anyone, for any reason, for anything.Purchase or attempt to purchase anything else on credit such as another car, truck, boat, furniture or other real estate.
(5) Charge any abnormal amounts to your current credit cards or credit lines.
(6) Send in late payments, or incur late fees for anything.
(7) Wait longer than the time frame given per your contract to provide all necessary paperwork and information to your lender when requested.
MAKE SURE THAT YOU DO
(1) Keep all accounts current, including mortgages, car loans, credit cards, etc.Contact both your lender and your sales associates anytime a question may arise.
(2) Make all payments on or before due dates on all accounts, even if the account is being paid off with your new loan.
(3) Have any lender-required money/funds to your loan officer within 72 hours after home inspection is complete.
(4) Return phone calls from your agent, loan officer, settlement company, or anyone else involved in your transaction within 2 hours of a message.
WILL MORTGAGE PRE-APPROVALS HURT MY CREDIT SCORE?
This is a very common myth buyers have regarding getting preapproved. Getting preapproved is 100% a benefit to you as the buyer because it will give you confidence to write offers and pre-vent any heartache down the road. In a competitive market like ours a good agent and a smart seller will not even consider looking at a financed offer without a preapproval letter.
CREDIT BUREAU SCORING
Credit bureaus use a subtle formula that they don’t publicize how they crunch your credit history down into a single credit score. One of the things that can cost you points on your credit score is to have a bunch of inquiries coming in very close to each other. So, should you worry about what mortgage pre-approvals will do to your credit reports? Probably not. The “Ding” for One Inquiry is Very Small. The most a single inquiry on your credit report will cost you is five points. Often, your score, which can range from 300 to 850, will suffer even less than that. Unless you are seeking a new mortgage and are right on the cusp between a good credit score and a fair credit score, five points shouldn’t make any difference in your loan terms.
MAKING THE MORTGAGE PROCESS EASIER
All of the credit bureaus understand the complex timing of getting a mortgage. Therefore, they have instituted measures to avoid reflecting pre-approval inquiries on credit reports. For instance, if you are shopping around for the best rate, and several mortgage companies make credit inquiries about you within 45 days of each other, all of those inquiries will be bundled into a single event with a miniscule effect on your credit report. Your credit report also does not include any credit inquiries made within 30 days prior to your loan application. It is, therefore, nearly impossible that the mortgage process of pre-approval will cause enough damage to your credit score.