The smell of spring is in the air. This year’s beginning of spring may also represent that a new real estate cycle is upon us.
Before you call your local beloved Realtor to put an offer in on those units down the street, you should first get a check on your mortgage health.
More than ever, mortgage health relies on your credit rating or, in many cases, how your credit reads.
I recommend you start with a free copy of your credit report online. You will find many options with a quick search.
The free reports often come with one page per credit line that shows coded information on each specific account.
If you find yourself addressing an account that was a problem and you are making sure the rating is correct, the free copy you find out there can be cumbersome and be confusing.
If it is the case that you have deeper issues or history, the best report to work with is a “standard factual” report, which is the same report the underwriters for your mortgage will be looking at.
Loan modifications
Many people entering the market are dealing with a late payment history due to a loan modification situation.
If the late payments are 24 months old or older you are in one category and if it is more recent you are in another.
I would like to tell you that after two years no problem, but that is not always the case. I can assure you though, the longer away from the problem the better off you will be when getting a new loan.
I can also tell you that it matters more now on how your loan is handled by your lender then it ever has been.
There are too many factors to list in this column of what is involved in this part of the process. I can say that services have different ways of stating credit information on the report that can mean the difference between putting 5 percent down or 20 percent down on a property purchase.
Short sales and foreclosure
The lending guidelines suggest that you need to be two years from a short sale and three to seven years from a foreclosure to obtain optimal financing. Although I have seen borrowers, who were very strategic in their short sale negotiations, walk away and buy a house six months later. They were able to do this because of how the loan servicer rated them on the credit report.
These matters play a huge factor when somebody is buying a house and is looking for financing. There are also possible ramifications if you are not careful in how you disclose when you apply for a loan when accounts have “disappeared.”
Credit Cleaning Companies
Buyer beware. There are some good ones and some not so good. Here is the gist of it. There are rights all consumers have to address what is being said about them on a credit report. In addition, there are methods that will take items off of a report while they are being researched. Banks and loan servicers can be overwhelmed by the process of consumer rights.
It is in your best interest to be prepared and have your best foot forward. You need to have a professional team that knows the ins and outs of all of these matters to ensure you will get a fair shake in an unforgiving jungle.
