Critical Advice for Getting a Home Loan - Part 2

Published by peter | Filed under Market Trends, Miscellaneous, Pinellas County Homes, Real Estate

A recent article about the first-time homebuyer tax credit cautions buyers under contract to wait until after closing before purchasing appliances, furniture or similar items on credit. The article notes that some mortgage lenders are running credit reports on closing day, and even an additional credit inquiry (let alone a purchase) may raise a red flag that could require additional documentation and potentially delay closing. We know how important the mortgage process is for more than 80% of our customers, so we thought we would share some insights regarding how lenders view credit to ensure a smoother mortgage experience.

I know that when I am a customer for a service that I rarely utilize, I appreciate understanding “how it works” as much as I need to trust the professional with who I am working. Lenders want to know the customer’s track record at paying their debts.That’s where the credit rating comes in. If a new credit report is pulled before closing, it suggests that the consumer may be looking to acquire more debt—and this could jeopardize the affordability of the mortgage. Do not even talk to somebody in an industry that pulls credit reports (like a car dealer) until after your closing. Activity in your credit report might indicate your future inability to repay the loan, so the key is to “lay low” until after closing.In summary: If you are looking to buy a home (and get a home mortgage loan), then you need to be aware of what the mortgage underwriter is looking at when analyzing your “willingness and ability” to repay the loan.

All new activity in your credit history is “bad,” so limiting your financial activity is critical. A buyer’s best bet is to work with a mortgage lender who will take the time to offer professional guidance and explain up front exactly what they need to do to close on time (and then follow that advice!).