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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