Bobbi Clemens Mortgage Advice: Preparing your Credit

I am working with a lot of first time home buyers right now and I seem to run into the same couple of issues: little or no credit history and last minute preparation. By taking the time to build the proper credit, you will give yourself ample lending options, which is key to finding the best mortgage in this market.

A quick reminder: With good credit, 680+ you can still get a loan with only 10% down.  20% is needed in the case of credit below 680. 

Issues and Solutions

1. Not enough credit history:  Most lenders require 3 (some require 4) tradelines be open for at least 24 months.  A tradeline can be a car loan, student loan, or some type of credit card.  Once a card is open, never close it - use it two or three times a year to keep it active.  Depth of credit history positively affects one's score.

2. Using too much of their available credit leads to a lower than necessary credit score.  Use no more than 30% of the available credit on any given card.  If you have the cash to pay down your cards, spread the available funds across several cards to reach the 30% mark.  Don't have the cash to pay balances down to reach the 30% mark? Call your credit card companies and ask them to increase your available credit.

3. Receiving a "gift" at the last minute. You don't have at least 5% of your own funds for a down payment, so you ask your parents for a money gift. Be sure to deposit the money into your account at least two statement periods before going into contract.  This alleviates the need for a gift letter and gives the you more lender options.

4. Not assessing their credit situation with a mortgage broker long before going out to shop for a home.  The reports that consumers pull for themselves vary greatly from the mortgage credit report a lender will pull for you.  I regularly see differences of 30 points or more.  For a nominal fee, a lender can pull the proper type of report so that you know they are judging you on.

Comments

[investment property rental mortgage advice]

I've been using a credit card for almost a year, and my mortgage have been disapproved every time I apply. perhaps my credit card is not applicable to the mortgage investment.

-gab

[ugg boots outlet]

Painting is silent poetry , and poetry is a apeaking picture.