Category Archives: Mortgage-Credit

Why do I need a mortgage pre-approval?

The Realtor® requests a mortgage pre-approval or verification of funds. You have determined you are ready to research  the purchase of a house. You may start out looking at homes on real estate websites. During the process, you contact a real estate agent to view a specific home. You may not be ready to disclose all of your personal information, at this time. It may be your preliminary plan to determine what is available in the market. You may be researching a different area to move to or you aren’t sure of your buying power. The purchase of a home is the largest financial transaction most people will make in their lifetime. A serious buyer is willing to provide the information necessary to complete this transaction.

If you are on a search for a new place to call home, you will have to pay for it. A mortgage pre-approval gives you insight into how much home you are able to afford. A mortgage professional can also educate you on options and benefits you may not have been fully aware of. We all like to think we are our own experts but even Realtors® learn something new with each change in lending laws, policies and guidelines. Mortgage lenders are expert in their field and will provide all options available to you.

“PRE-APPROVED”

A cash buyer will be asked for verification of funds. A percentage of prospective buyers feel they do not have to disclose their personal information to a real estate agent. An experienced Realtor® will verify the buyer’s ability to pay. A licensed Realtor also has a fiduciary duty to keep information confidential and direct actions in the best interest of his/her customer/client.

If you are unable to apply for a mortgage or do not have your funds at goal status, a real estate agent will be able to provide information necessary for a successful transaction. If you have an existing relationship with a financial institution, they may be able to provide direction for attaining your home buying goals.

For the safety of a real estate agent and the owners of the homes you wish to view, prospective buyers must provide personal identification. Contact information allows the Realtor® to communicate information essential to the customer’s needs. When you are ready to purchase a home, realize the real estate agent providing services to you, is a professional. Your best interest is forefront.  A qualified buyer will have the information necessary to make the best decisions.

 

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Mortgage credit qualification

Balance in your life will lead to a balanced credit profile. Planning the purchase of a home involves multiple steps and financial practices ahead of viewing new homes. A satisfactory credit rating to qualify for a mortgage is not instantaneous. It involves planning, self discipline and intimate knowledge of your personal money management.Mortgage credit qualification

A great number of folks do not know off the top of their heads, what their net and gross incomes are per year. Money management is key in creating and maintaining a balanced credit report with the three (3) major credit bureaus, TransUnion, Equifax and Experian. Money management is knowing exactly how many dollars are coming into your home and how many dollars are exiting. The exit dollars must be designated strategically to work for you. Knowing where each dollar is allocated will allow your goals to be met.

Mortgage credit qualification requires self discipline. Your personal credit profile includes secured and unsecured loans, revolving credit cards, mortgages, vehicle loans, student loans and any loans you may have consented to as a co-applicant, co-signer or guarantor.

In order to qualify for a mortgage, your credit report will project the amount of risk a lender is willing to take by lending you funds to purchase a home. A few of the elements a lender will consider is the amount of debt you have accumulated in reference to your income (debt ratio). The amount of available credit, in reference to your monthly income may be viewed as a higher risk. Little to no credit will not provide enough of a history to calculate risk. The manner in which you pay your obligations is a risk factor. Paying debts late, riding the credit line/limit, bankruptcy, liens, foreclosures, repossessions and charge-off accounts weigh in the negative when calculating the probability of your ability to pay a mortgage payment in a timely fashion. Paying your credit obligations, on time, will increase your credit score and decrease your risk factor.

A free – (really free) credit report, authorized by federal law, is available to each consumer at: www.annualcreditreport.com

Knowing where you spend each and every dollar will also enhance your ability to qualify for a mortgage. A budget that includes saving for a down payment and closing costs will show a lender you’re disciplined and able to take care of your business. Balance in your life includes balance in your budget. Extremes in borrowing practices and running credit lines continuously up to their limits will present “red flags”. Writing down all expenditures, from fast food to gasoline will enable you to realize all money spent. Knowledge will be the foundation to grow your house buying plan.

 

 

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Foreclosure, credit and eviction protection for military women & men

President Obama signed into public law No: 114-142, S.2393 – Foreclosure Relief and Extension for Servicemembers Act of 2015, on March 31, 2016. This law provides an extension through 2017, for foreclosure protection under The Servicemembers Civil Relief Act – formerly known as The Soldiers’ and Sailors’ Civil Relief Act.

The Servicemembers Civil Relief Act (SCRA) provides specific

https://www.justice.gov/sites/default/files/crt/legacy/2011/03/23/scratext.pdf
https://www.justice.gov/sites/default/files/crt/legacy/2011/03/23/scratext.pdf

financial and foreclosure protection for our military women and men that have debt originating before their call to active service.

It is important for creditors and landlords to note some of the provisions of protection in this act:

  • State Tax Relief
  • Termination of Property Leases
  • Eviction Protection
  • Foreclosure and Forced Sale Relief
  • Judicial Relief – does not include criminal
  • Ability to Terminate Automobile Leases
  • 6% Cap on Credit Interest Rates
  • Credit Rating Safeguards
  • Insurance Cancellation and Reinstatement protections

There are specific requirements which must be followed to insure the protections for the servicemembers. The credit or mortgage borrowers must request the protection under this act. The loan or debt must have originated prior to the current active military service. The lenders, landlords, creditors, insurance companies, etc. must be notified, in writing, the servicemember is requesting protection under The Foreclosure Relief and Extension for Servicemembers Act of 2015.

This is a general list of provisions. Further specific information is available at: https://www.justice.gov/sites/default/files/crt/legacy/2011/03/23/scratext.pdf

 

 

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Grow a down payment

Buying a home is within everyone’s reach. Attitude and discipline will assist in reaching your goal. First time home buyers are creative people. You can grow a down payment within the means you are living with now. Home ownership will benefit your financial bottom line. You may be paying higher rent than a future mortgage payment calculates.Grow a down payment

Review your expenditures. For one week, write down every cent you spend including gum, candy, coffee, soft drinks, movies, drive-thru and impulse purchases. If you are buying $5.00 per day, for on- the- go coffee or soft drinks during a work week, it totals to $1,300.00 per year.

Toll road fees appear to be incidental to save 15 minutes of commute time. If the toll is $3.00 each way to work, five days a week – a one year total is $1,560.00.

How bad do you really want your own home?

Quit eating out. For the cost of a chef salad in your local restaurant, you can purchase salad ingredients at your local market for a few days of salad at home. Salads do not require a lot of “cooking” expertise. Learn how to cook your favorite eateries’ entree. Your down payment fund will grow exponentially. Create events such as picnics for a new view instead of the golden arches. Barbecuing in your new back yard can be a dream come true.

Do you own a boat, motorcycle, ski-doo, snowmobile, RV or classic car being stored? How often do you utilize these fabulous grown-up indulgences? Sell these items. Add up how much you will save in insurance, maintenance, storage fees and running costs. Grow your down payment. Buy your home. Buy another fancy schmancy fun extravagance to store in your new garage.

Eliminate debt, starting with the smallest balance first. Observe the amount of monthly interest you are being charged on the account. Paying off each bill will allow that dollar amount to be saved toward your goal of home ownership.

One person’s junk is another person’s treasure. Consider a garage sale or selling unused items on Ebay, Craigslist or other auction sites. If the motivation is to own your own home, think of getting rid of “things” as less to move when you switch to your new house. Less stuff to move will also lessen the moving expense. Your down payment will grow with each deposit from the sale of possessions you no longer want or need. Do not buy anything you do not actually need until your down payment goal is met. Weigh the difference between “want” and “need”.

Each of these suggestions will take fortitude, tenacity and the extreme desire to reach your down payment goal. Increasing your income with a second job can expedite the process. It is still possible to make the dream of home ownership a reality in your near future.

Share your success- add a comment of any additional ideas you may have for growing your down payment.

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