Start A Green File
A Green File should contain all of your important financial documents. Regardless of the loan type, lenders will need information about you. Make copies of financial statements; bank accounts, investments, credit cards, auto loans, recent pay stubs and two years’ tax returns.
Check Your Credit Rating
Credit scores range between 400 and 800. 620 + is considered "good". 680 + is considered "premium" and may possibly help get you a lower interest rate.
Below you will find the contact information for the 3 major credit reporting agencies to help you determine your credit rating. Ask your lender how to improve your credit score if you need to. Going forward, treat your credit like gold.
Savings & Debt
If you are buying real estate, try to accumulate funds towards your down payment, closing costs (appraisal, miscellaneous fees, escrow, title insurance, etc.) and expenses such as inspections. Furthermore, try to pay down existing revolving and high interest rate debt like credit cards.
Toe The Line
Now is not a good time to change careers, move your money around, or buy big ticket items. Lenders like stability. So if you are considering any major changes, it pays to meet with a lender and ask them how to proceed before you make any changes! If you are tempted to buy a big ticket item, consider the following:
|A $500 a month debt payment (like a credit card or auto loan) could lower the amount of home you can afford by about $83,000! *|
* Based on a 30 year mortgage at 6% interest.
Owning a home is a great investment and it is key to plan your mortgage payments ahead of time. Calculate your monthly mortgage using our free calculator below.
DISCLAIMER: The information found in these calculators are to be used as a guide and is deemed reliable but not guaranteed. Please schedule an appointment today to find out more information about your loan.
Your Credit Report
YOUR CREDIT REPORT STEP 1: Determine Your Credit Score Your credit worthiness is determined by both your FICO score AND the debt you carry. Tips:
- Meet with a mortgage professional and run your credit report. It’s FREE.
- Pay down credit card debt first, before paying down of mortgage debt.
- Don’t be late on any of your payments. Even just 30 days affects your FICO score negatively – 720 is the magic number.
- If your credit isn’t at this optimal number, work with your lender to create a Credit Repair Strategy . A lender who is committed to your long-term success will be willing to guide you through this process.
STEP 2: Repair Your Credit/Manage Your Credit Sometimes credit needs attention before you can qualify to purchase property. If your FICO score is too low, you need to get some help to fix it. Tips:
- Take care of needed debt repair early in the game!
- Ask for everything from your creditor in writing, on letterhead, signed, and include account numbers.
- Manage your current balance on your credit cards so they are not maxed out. In some cases it is better to have 2 credit cards with less than 50% of the available balance charged then 1 credit card maxed out to the limit.
- Tradelines! Make sure you have enough tradelines of credit to qualify for your mortgage. Typically 3 tradelines is a requirement with at least a 2 year history.
Courtesy: Jennifer Ellison, Summit Funding