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Orange County Home Mortgage Loans |
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| Questions? Call (800) 745-1995 |
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Whether you are a first time home buyer applying for your first home loan or a seasoned homeowner planning to refinance or purchase another home, you will need to pass a rigorous credit check in order to qualify for the most favorable loan package. In today's Real Estate economy, managing your credit is as important as managing your bank account. Home mortgage lenders look at your employment history and credit history as qualified indicators of how responsible you are in meeting your financial obligations. At a minimum, they will want to see your employment record for the past two years and will scrutinize closely any past due payments of over 30 days. In addition, they'll look for late credit card payments over the past 6 to 12 months. In general, about half of your qualification points are based upon how well you've paid your bills and the other half on how close to your credit limit your are. Your credit record is maintained by 3 primary credit reporting institutions; Equifax (also referred to as Beacon), Experian (aka TRW or FICO) and Trans Union - (now commonly called Expedia). Prior to applying for a loan, it is important to check your credit rating at all three agencies to see if there are any incorrect reports or valid negatives (derogatories) that you've forgotten about. Often, a negative item -referred to as a "ding" or "credit ding", can be explained with a letter attached to your loan application package. Things to be aware of and that Underwriters will make note of include a history of late payments, frequent job changes, previous foreclosure, bankruptcies, Judgments against you, bounced checks and low bank balances. Common practice in approving your loan is for Underwriters to use the middle of your 3 credit scores or the lower of 2. Other items may be factors as well. If you feel that your credit profile is sub par and may not pass an Underwriter's examination - there are things you can do about it to improve your credit worthiness. A good place to start preparing for this process can be found by going here - to the Federal Government's site on credit repair self help. Be careful about credit repair organizations that want you to pay in advance before services are rendered. Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the promised services. Be proactive in addressing your credit profile. It is the most powerful tool you have in obtaining favorable terms on your next mortgage loan or home finance application. |
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