Your Mortgage Start to Finish

There are several factors to consider when shopping for a new home. The following information provides a guide to help you make an informed decision and avoid common pitfalls along the way.

The Process for Buying a Home

Meet with the Loan Officer to determine the best loan program based on your financial goals and needs.
The Loan Officer will provide a Home Buyer Analysis letter to strengthen your offer on a new home.
Begin looking at homes with a Real Estate Agent.
Once you find your home, your Real Estate Agent presents an offer on your behalf. The offer is accepted, the P&S is signed and a closing date is set.
Complete mortgage loan application and submit all the required documents.
Appraisal, title paperwork, insurance binder and other documents are ordered.
The complete loan file is submitted to an underwriter for review. Any final conditions are collected and a final loan approval is issued.
Your loan is cleared to close.

The DOs

1: Do Stay Current on Existing Accounts. Late payments on your existing mortgage loan, car payment, or anything else that can be reported to a CRA (Credit Reporting Agency) can cost you dearly. One 30-day late payment can lower your credit score by 30-75 points. Make your mortgage loan payments on time but call us before you make any payments that are scheduled within two weeks of closing.

2: Do Continue to Use Your Credit As You Normally Would. Red flags are easily raised within the scoring system. If it appears you are diverting from your normal spending patterns, it could cause your score to go down. For example, if you’ve had a monthly service for internet access billed to the same credit card for the past three years, there’s really no reason to drop it now. Again, make your changes after the loan funds.

3: Do Call Your Loan Officer. If you have any questions during the loan process, I am here to help and I am just a phone call away.

The DON'TS

1. Don't Apply for New Credit of Any Kind. You receive invitations to apply for new lines of credit, don’t respond. If you do, that company will pull your credit report and this will have an adverse effect on your credit score. Likewise, don’t co-sign on another person’s loan or establish new lines of credit for furniture, appliances, computers, etc.

2: Don’t Pay Off Collections or Charge-Offs. From now on, don’t pay off collections unless we specifically ask you to in order to secure the loan. Generally, paying off old collections causes a drop in the credit score.

3: Don’t Max Out or Over Charge Existing Credit Cards. Running up your credit cards is the fastest way to bring your score down, and it could drop up to 100 points overnight. Once you are engaged in the loan process, try to keep your credit cards below 30% of the available limit.

4: Don’t Consolidate Debt to One or Two Cards. Once again, we don’t want you to change your ratio of debt to available credit. Likewise, you want to keep active beneficial credit history on your record.

5: Don’t Close Credit Card Accounts. If you close a credit card account, it can affect your ratio of debt to available credit which has a 30% impact on your credit score. If you really want to close an account, do it after you close your mortgage loan.

6: Don’t Make Any Adjustments or Transfers in Your Asset Picture. Don't change investments, move positions, close accounts, open new accounts, or substantially change your asset picture without contacting us first.

7: Don’t Make Large Un-explainable Deposits into Bank Accounts. Deposit amounts exceeding past history will be questioned by an underwriter unless the deposit is a documented gift. Also don’t transfer money between bank accounts.

8: Don’t Make Changes With Your Employment or Income. Employment stability is a big factor in the underwriting loan process. Quitting or changing jobs or even positions within the same company can greatly endanger your entire loan approval. INFORM US IMMEDIATELY OF ANY CHANGES TO YOUR JOB, POSITION, INCOME.

What You Need to Know About Credit

Your credit score is one of the most important numbers you have. Not only does your score affect your interest rate when applying for a loan, it can also impact your insurance rate, certain job prospects and even your chances of renting a great apartment. As a result, improving one’s credit has become a multi-million dollar industry.

Credit scores were developed by Fair Isaac and company (FICO). The models created using FICO take all the detailed information about your credit report and produce your credit score using different weights and factors contained in the FICO scoring models.

The purpose of a FICO score is to show how likely you are to become at least 90 days late in making payments in the next 24 months based on patterns in your credit history, compared with patterns of millions of past customers. Other credit agencies, such as Experian, Equifax and TransUnion, calculate their own credit scores within their own ranges; however, the FICO score is the standard that lenders use when they pull your credit.

Credit Score Tips

Pay down revolving debt. It is best to keep balances low on credit cards and other revolving accounts – maintain balances below 50% of the available credit limit. 24% is optimal.

Apply for new credit accounts only when you need them. Remember that closing accounts does not make them go away. A closed account with a poor payment history may become a more recent account because the date of activity will change. An open account with a low or zero balance is better than a closed account.

Things to Keep in Mind

1. No one can change negative information that has been reported correctly.

2. The only way to remove accurate negative information from your file is to wait until the legal time period has expired.

3. You can repair your credit yourself for free by using sound credit practices.

Did You Know?

FICO scores are used not only for a mortgage loan and credit cards, but for auto loans, insurance and utilities.
Credit reports reflect charge offs or collection accounts for up to 7 years, and bankruptcies for up to 10 years.
You can order a free credit report annually, at no charge, without impacting your credit score.
Having a minor balance without missing a payment is better than closing an account.
Paying off an old collection may result in a drop in your credit score.
Consolidating credit cards increases your ratio of debt to available credit and lowers your score.
Using the maximum amount on a credit line can drop your score.

Mortgage Network, Inc. is not a credit repair organization and does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. For specific advice please consult a credit repair organization or a financial, legal or other professional adviser.

Closing Your Loan

A closing is the last step in buying your new home! The closing happens after your home has been inspected, your contingencies have been met and your mortgage loan has been approved. While the closing day can seem both overwhelming and exciting, the key to a successful closing is to be prepared.

What is a closing?

A closing is a meeting that involves all of the parties signing the final documents and legally transferring the property to you. There are costs and fees in this final step of which you need to be aware. When you are finished signing the closing documents, you will be given the keys to your new home. The mortgage process is now complete, and you are officially a homeowner!

Who will be there?

Usually, the closing takes place at a closing agent's office. The following individuals should be there or be represented:

You and any co-borrower if they are involved in the transaction
The seller or the seller's legal representative
Closing agent
The seller’s real estate agent
Your real estate agent

The thing you’ll probably remember the most is how many times you had to sign your name. There are lots of documents that need your signature. Here’s an overview of what will happen:

You will sign a document indicating that you have accepted the mortgage loan from your lender. In some states, you will sign a mortgage, and in other states you will sign a deed of trust.
Your lender will transfer the money to the seller on your behalf. The seller will then sign a document called the deed, transferring ownership of the property to you.
The closing agent will coordinate the preparation, execution and, when necessary, recording of all documents.
Additionally, there will be a number of affidavits and declarations for you to sign. These legally binding documents spell out the financial obligation you are taking on and your rights as a homeowner.

Make sure you understand what you’re signing. It is important to read the documents carefully. Don’t hesitate to ask questions. The closing agent will go over the documents in detail before the actual closing, so you are comfortable with the process.

The day you close on your new home will be one of the most rewarding experiences of your life. While home ownership does come with responsibility, you’ll take pride in the fact that you have a new home for you and your family to enjoy now and in the future.

If you would like more information or just need some advice, we can provide guidance every step of the way. Whether you are interested in buying a new home or refinancing, we are here to help you with a call, email, phone or text.