Financing the purchase of a home is getting more difficult these days, especially for those consumers who may have recent or past credit delinquencies in their credit file.
Credit score requirements by most mortgage lenders are changing on a weekly basis, requiring no less than a 580 middle score from the three credit repositories: Transunion, Experian, & Equifax.
Many of the loan approvals issued by banks and mortgage lenders over the last several months have failed to close due to these changes in the credit score requirements, leaving many potential homeowners without the means necessary to finance their home purchase.
In years past, banks and mortgage lenders had the ability to finance home purchase for consumers with low credit scores, recent delinquency and even a recent bankruptcy. Well, those are long gone, with the large number of foreclosures around the country as evidence of substandard underwriting of consumers with low credit scores.
Today, thousands of consumers with credit issues still choose to shop for a home first sign a purchase contract for a home they think they can afford, and then take their chances of securing financing with a bank or mortgage lender.
I still find consumers with credit issues armed with a purchase contract, running from bank to bank, mortgage lender to mortgage lender, scrambling to find someone to finance their home purchase. In most cases, they fail to get their financing, fail to get their home, and could likely lose the deposit on the purchase contract.
Here are some tips on helping you to deal effectively with your credit issues:
*Get a FREE copy of your credit report from all three credit repositories. All three credit repositories (Transunion, Experian, & Equifax) allow consumers one free credit report per year. Other firms such as www.FreeCreditReport.com can provide you with additional services such as credit analysis and helpful information on improving your credit.
*Use Your FREE Credit Report When Shopping For a Mortgage. Mortgage lenders are anxious to see your credit report, especially your credit scores. Bring the free credit report to your loan officer when you first apply for a mortgage. The information contained within your free credit report should provide sufficient information for the loan officers to determine if your credit works within their own underwriting guidelines. A competent, experienced loan officer will easily understand the information on this report. If a loan officer insists on ordering his or her own credit report on you before committing to a loan approval or denial, consider applying with another bank or mortgage lender. Needless inquiries into your credit file can lower your credit scores as well as decrease your chances for a loan approval.
*Get Approved For Financing BEFORE You Sign A Purchase Contract. Knowing how much you can afford in terms of loan amount and the monthly loan payment is most important. Signing a purchase contract for a home without first knowing that you can afford to purchase the home will not only create disappointment for you, it could also obligate you to purchase the home anyway, depending on the legal verbiage of the purchase contract. Knowing how much you can
*If Your Loan Request is Denied, Work diligently to fix your Credit Issues. Deal with your credit issues by contacting creditors directly to clear up the delinquencies. Consult with a credit counselor about payment plans that can help you re-establish a payment history and even help to re-establish your credit. Consumers with serious credit issues should consider consulting with an attorney who specializes in bankruptcy.
Working to correct credit issues will make it easier to secure better financing options when you are ready to purchase a home. Choosing to ignore your credit issues when applying for a mortgage loan makes it less likely you will get the financing you desire. With increased credit standards asked for by most mortgage lenders, ignoring credit issues to today will certainly diminish your chances of securing financing in the future.
Mike Sikorski MBA, GRI
Licensed Real Estate Broker
Loss Mitigation Specialist
Florida Realty Network LLC
22079 Kimble Avenue
Port Charlotte, Fl. 33952
(941)206-6000
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