Your Credit And Mortgage Loan

What is the difference between "pre-qualifying" and "pre-approval"?
Pre-qualifying and pre-approval: Pre-qualification is someone such as myself looking at your income, your credit, and your assets and asking you all the appropriate questions.And with my knowledge, I'll basically say, "Yes, Mr. Smith, you are qualified for a $500,000 loan". But, I am not an underwriter of a lending institution. So if you wanna go through the whole pre-approval process, then I just need to collect some documentation from you, submit a loan package to a lending institution and let their underwriter approve your loan.

Why is it important to pre-qualify for a loan?
It's very important to pre-qualify for a home loan, because in my business, every loan that I've touched over the last 15 years is completely different. If you're going to go out and make an offer on a million dollar home, but you don't realize your credit scores are very low, you really don't have that much money to put down for a down payment. You go into escrow on a piece of property and you put an earnest money deposit check down, and there's a good chance you might not get that back if you don't proceed with the deal. Getting pre-qualified is just essential. Before you even start looking for a home, you need to get pre-qualified from a mortgage broker such as myself.

How do I pre-qualify for a loan?
Simple, just give me a call, and we'll either get together face to face or we can talk on the phone. I'll just start asking you a lot of questions that are on the loan application. For example, how's your credit; we can run your credit report with your permission. What do you do for a living; are you salaried or self employed? How much money do you have in the bank? I'll ask all these appropriate questions, and also just talk about who you are and what you're looking for. With all this information, I'll be able to educate you on for what you could actually qualify for a home, and once we've done the prequalify route, you can go out and look for your dream home.

What is a credit report?
A credit report allows me to see everything about you. In simplest terms, I can see all your credit that you have built up over the years and if you are making your payments on time. Your credit report will show me how much credit card debt you have, whether or not you have student loans, if you have a mortgage in the past and if you have made those payments on time. You always want to pull your credit at least once or twice a year.

What is a credit score?
Credit score has really been popular now over the last five or six years. In a nutshell, it's a computer module that basically takes into account your credit and such issues as if you paid on time, how much debt you currently have, how much debt you can actually tap into if you like and if you always made your payments on time.

How will my credit score impact my mortgage loan?
With a credit score, you want the highest one possible, because that's what the banks are looking for. They've done their studies over the years so if your credit score is this and that, you're going to get much better, preferred pricing. So, with that in mind, make sure you pull your credit report at least once or twice a year. If you're seeing your credit score above 700, then you're going to be getting "A" paper pricing from the majority of the institutions that are out there.

How will previous bankruptcy effect my application for a mortgage loan?
Having a bankruptcy its definitely going to effect your application for a mortgage loan. If it's been more than seven years, there's a good chance that with most of the lending institutions out there, there won't be any hit toward your rate. However, if it's less than seven years, you will definitely pay a slight premium to still be able to obtain that mortgage. You're probably going to put a little more money down for a down payment and, at the end of the day, you will pay a higher rate for that bankruptcy.

If we are applying together and my spouse has a higher credit score than I do, will lenders still look at my score?
If you as a couple are applying together, they will still look at your credit rating. But the majority of lenders out there are going to go and use the credit score of whoever is the primary wage-earner in the household.

How can I find out what my credit score is?
The best way is to just give me a call. I can run your credit score. All I need is your name, your social security number, and your current address. With that information, I can send you your credit report. If there are any issues or discrepancies that are on your credit report, then I can work that out with you and get that stuff removed so that when you are looking to purchase your new home, you'll have a perfect credit score by the time you are ready to do so.

How can I improve my credit and FICO score?
One of the best ways to improve your credit and FICO score is to give me a call. I can run your credit report and then use the agency that we work with to help you fix it up. We have a system that's called repad re-score and it will actually say, “Look, if you pay down your debt by $5,000, or if you pay this credit card off, your credit score will be improved by 'x' amount.” So, that would be my recommendation.