Saturday, June 18, 2005

5 TIPS for SUCCESS in Getting the Mortgage You Want

1. Current credit outstanding. Before you apply, pay off all credit cards, wipe out your outstanding bills or at least whittle them down, and then keep any balances very low.

2. Check your credit report. Check with all three (3) major credit bureaus to get copies of your credit report, then review these VERY carefully. Some researchers believe that forty (40) percent of credit reports contain errors! Don't let mistakes on your report raise the rate you will be charged for a mortgage, or worse, keep you from getting a mortgage at all!. Get the record straight and fix those discrepancies before applying for your mortgage.

AND, two more hints about your credit cards: 1) If you know you will be applying for a mortgage, simply do NOT apply for new cards and 2) do NOT close your current accounts. Either of these actions could cause a lender’s eyebrows to go up, and that’s NOT a good thing for you.

3. Money down. Figure out your debt-to-income ratio to get an idea of how much you can afford to pay on a monthly basis. That will help you determine the amount you will put down when you invest in your new home. The more you can put down up front, the lower the loan, and the more likely you are to be approved.

Of course, if you have excellent credit, you're likely to be approved regardless of how much money you put down. But if your credit is less than perfect, the amount of your down payment may mean the difference between getting/not getting your Letter of Commitment.

4. Employment and Income and Funds Available. Steady source(s) of income make lenders smile. Better NOT quit or change jobs immediately before applying for a mortgage.

Remember, in addition to a down payment, you will need to have funds available for closing costs and to pay for points (if necessary). Don’t make major purchases and risk depleting your available funds just prior to buying a home. Lenders check your available funds and credit rating the day or so before Closing, and you can put yourself in a no-win situation if you just bought a sub-zero refrigerator or a riding mower for your new home.

5. Due Diligence. It’s up to you to ask lots of questions. Every lender is different. Talk to at least three (3) mortgage bankers. Ask about how many mortgage applications they approve and disapprove. (It's not a good sign if the lender denies 25 percent of the people who apply.) What is the history of the lending institution and what is their reputation in the community? Once you select the mortgage originator for you, be totally up front with your lender. If you secretly wonder if fiddling with/ altering information to increase your chances of getting a loan might shine a brighter light on your loan desirablity, stop wondering NOW. You risk being charged with fraud and may never find a lender who will work with you again.

for more information, please contact 1031@janeAnne.com

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