Mortgage Updates

Contacting a lender prior to house hunting is important for another reason... checking to see if you are credit worthy.  The lending industry has tightened up and you want to be sure there are no "quirks" that will stand in your way.

Upon receipt of your loan application one of the first things your lender will do is a thorough credit review. This process consists of more credit than credit scores, although the scores will play a key role.  Lenders look at number of open trade lines, payment history and areas such as public records (judgements) and collections.

Typically, buyers with scores over 720 will not have problems "credit" qualifying.  However, if scores are below 640- delays or a negative response from underwriting will be the result.

Road blocks to purchasing include Chapter 7 bankruptcy within the last 2 years, a Foreclosure or Short Sale within the last 4 years.  Some investors differ on short sale seasoning.  Your credit track record since the BK was discharged will also be carefully reviewed. New credit needs to have been established with no late payments. 

You may be able to qualify for a loan depending on how long ago and the reason (s) which caused the bad credit.  A good lender will be able to advise you on whether your credit history will prevent you from qualifying for a home loan in the immediate future.

Your lender can also help you by providing a road map to improve your scores, or perhaps refer you to a credit repair agency. 

Honestly, it's not worth trying to squeeze yourself into a loan... with scores under 620.  There are lenders that say... "no problem", but what you find out is that it is a "problem".  The hassle and heart ache and delays, just don't cut it if you ask me.  It's better to get a road map... wait through the repair part, make timely payments, save a little money... then buy. 

Here's a link to a great little video that does a fabulous job explaining credit and credit scores.

For more information or other blog posts and "What is a Credit Score" visit; http://www.ingridpierson.com