How Many Buyers Really Understand Their Credit Report.
This is a very important topic that all consumers should make sure they are aware of, their credit and the ramifications of their student loans.
How Many Buyers Really Understand Their Credit Report??I'll never forget a lovely couple who wanted to buy their first home in Gaithersburg. There were many lovely new home communities in the area of their search. However, the prices for new construction in that area began at about $550,000 base price. O.K. A quick calculation showed that they had sufficient income to qualify, but just barely. Being pretty conservative when qualifying buyers for a price range, it was clear that they were qualified, but only for the smaller floorplans offered and nice lots with no lot premium. Fortunately it was also clear that they would be very happy with a home in the $500,000 price range.After selecting a floor plan, a minimum of upgrades and options, it was time to speak with the loan officer to get a "lender's letter" for the builder. That meant a review of their individual credit reports.ALMOST THERE! The credit report revealed that the primary buyer had excellent credit scores, a modicum of accounts and no late payments. However, the co-buyer's credit history was a different story. Student loans, revolving accounts, loans, credit card accounts, etc., ALL IN DEFAULT, and no payments made on any that were due and past due for over 2 years."I Was In School Then." They had a copy of their credit reports so we met at their apartment to review and strategize. The good news was that the primary buyer could qualify and finance the home in his name only. However, when we reviewed the co-borrower's credit report, there was nothing good about it. Her explananation was the same for every negative item, "I was in school then". "I was in school then". "I was in school then".Somehow, this young lady believed that, as long as she was in school, she had no responsibility for any payments on any accounts. Her student loans were in deferral and she believed that it also covered all of her credit accounts and she could continue to shop and make no payments with impugnity. One would have thought she'd become aware of something when all of her accounts were suspended or closed by the creditor. Rather than charge everything, she just became a cash shopper. That's not so easy with real estate.
They decided to wait until she could be a co-borrower. Oh well.That experience made me wonder what other misconceptions consumers have about their credit???Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988, serving home buyers in Loudoun County VA.
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