Sr. Mortgage Loan Originator #AK205946
Alaska USA Mortgage Company #AK157293
Phone: (907) 646-6359
Fax: (907) 375-4880
Give Yourself Some Credit:
Easy Ways to Score Points with Underwriters
We all know the phrase "buy low, sell high." Many of you may be wondering if now is the time to "buy low" in the real estate market. Prices are down, inventories are up, and interest rates are near historic lows. This month YOU Magazine looks at how a smart investor or homeowner can become loan ready, and prepare his or her credit profile to take advantage of the buyers' market. Whether you are looking to invest, buy, or refinance now or in the coming months, your credit is going to play a more significant role in today's tight-fisted credit environment than it has in the past. This article will help you put together the kind of sound credit profile that any underwriter can appreciate.
In general, underwriters analyze your overall creditworthiness from three angles: your credit score, your income, and your assets. Let's take a closer look at these three elements.
But here's the kicker. Nearly 80% of all credit reports contain errors of some kind. Recent studies also indicate that about one-fourth of these reports contain mistakes so egregious that applicants could actually be denied credit. With this mind, the first step to putting your best foot forward is making sure everything in your credit report is accurate. To do this, visit www.annualcreditreport.com and get a free copy of your credit report right away. (Note: free credit reports do not include credit scores. Scores can either be purchased online or pulled by your mortgage professional.) Once notified of a mistake on your report, a credit bureau has thirty days to investigate and respond. If the information can't be confirmed, the item should be removed.
While you're online, be sure to visit www.optoutprescreen.com as well, and avoid the hassle of being bombarded with unsolicited mortgage offers, and make life a lot easier throughout the mortgage process. Finally, ask your mortgage professional to pull your credit for review as well and make sure that everything is accurately reported.
And what about those of us with a credit history we would rather forget? All is not lost. For individuals with spotty credit a lot can be accomplished with a professional credit improvement company. If you do decide to utilize a credit professional, plan on about 90 to 180 days for maximum results. An experienced mortgage professional can share other insights into the ins and outs of credit scoring.
In other words, talk to a mortgage professional about the common guidelines that allow for debt-to-income ratio (DTI). While some loans have been approved with ratios exceeding 50%, many conventional guidelines state that DTI should not exceed 36-40%. Depending on your overall profile, DTI may be able to reach as high as 45-50%, but it's best to keep this number as low as possible.
Finally, although it is still possible to get loans without income documentation, these loans are almost impossible to obtain without great credit scores, particularly if you're looking to secure a jumbo loan.
If you're even thinking about buying or refinancing real estate in today's market, it's important to talk to your mortgage professional before making any financial decisions that could affect your loan profile, including opening or closing any credit accounts. More importantly, you have to act now. Timing the so-called bottom of the market is a very difficult task, even for the experts. Great deals on real estate are available in just about every market right now, and interest rates are still very attractive. If you are looking to purchase a home, think long term and don't focus on the next 12-18 months. For those trying to sell a home, now is the time to be realistic about the current market cycle and take action. Remember, anything you give up on the sale side will be captured on the buy side. Bottom line: Do what's right for you today, and it will be right for you tomorrow.
License AK# 157293 Washington Consumer Loan Company license# CL-157293 California Residential Mortgage Lending Act, License# 4131067
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|Alaska USA Mortgage Company #AK157293
500 West 36th Ave., Ste. 110
Anchorage, AK 99515
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