9 Hurdles in Your Way to
Mortgage Pre Approval |
By Bill Carey |
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Being pre approved for a mortgage before house hunting will make
the process go faster and can save you money. Your real estate
agent will insist you apply for and receive a pre approval
before starting to look for homes. It will save your agent time,
keep you on the right track to complete the purchase process.
1. Application You can apply on line, over the
phone, or meet in person with a mortgage loan officer. The
process is simple and easy 20 to 30 minutes and they should have
all the information necessary. Within 24 hours you should have a
pre approval sometimes it only takes 1 or 2 hours.
2.
Credit Report With your social security number, full
name, and address all of your past financial is complied and
rated. The higher the score the better a 750 score and above
your at the top of the list, 680 and above you are in the game
but may have hoops to jump through for a better interest rate,
below 650 you can still get a mortgage usually at a much higher
interest rate.
3. Work History 2 years of
a steady work history, with the same company is best in the same
industry is still good, continually changing jobs and industries
is not good for your credit rating. Your work background should
show a steady income which predicts future ability to pay. Your
work history also indicates to banks and mortgage companies that
you are stable and a good bet for them.
4. Payment
History Any loan, credit card, rental, or payment
contract will report when you are late on payments. A consistent
history of late payments on any loan could put you out of the
game for buying a home. You can get back in by changing your
habits and making payments on time over a period of 6 months, 12
months or longer will be necessary to prove you are worthy
again.
5. Current Loans All loans where
you are currently making monthly payments including credit card
balances are in the calculation along with your new mortgage
payments of how much you can safely handle each month. You maybe
required to payoff all your credit cards and loans before you
will receive the mortgage loan.
6. Student Loans
This seems to be the forgotten loan the government insures most
of these low interest programs and only puts minimal effort into
collections. It will show up on your credit report in the past
when you bought a car, major appliance, or leased a property it
was not a big concern. With a home purchase everything is a big
concern and this could slow down or stop you from buying a home.
You will at minimum be required to bring this current you may be
required to pay it off in full.
7. Property Ownership
Owning a house or car or boat with no loans is a good thing
these are all assets and add to your net worth. It is much
better to own something out right than it is to be making
monthly payments where you are still in the purchase process.
8. Credit Cards The number of credit cards, amount of
credit available for you to use is also a factor. Your ability
to pay your mortgage is based on what your current payment
requirements are. Car loans, credit card payments, student loans
are all added to the monthly calculation. When those totals
exceed certain parameters you may not be able to buy the home of
your dreams because you will be limited in the amount a bank or
Mortgage Company will extend to you.
9. Defaults and
Judgments Defaults, Judgments, or Liens if any
business that you own or have owned or if you personally have
had court filings and judgments entered against you or a company
you own, you will need a detailed explanation and proof of
release before you will get any mortgage loan. If you don't have
any copies of the releases you must go to the county court for
copies. If you have paid off the judgment and it was never
recorded which is a very common problem, in this case hiring
your own attorney may be the only way you can have that process
completed and corrected.
These are the major and very
obvious hurdles. Others like have a relative with the same name
comes up often especially if their credit is bad or that they
have a lot of cards that show up as yours. Or a new big one is
identity theft will take a lot of work on your part and that of
your creditors to straighten out so that a bank or mortgage
company will accept the results. Start early to clean up any of
your problem issues before you make your application it will
save you time and money. |
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