Poirier Realty



Posted by Poirier Realty on 12/18/2018

Applying for your first home loan can seem scary or daunting to many first-time homeowners. However, this process, if done correctly, can save you thousands or tens of thousands of dollars on interest over the lifetime of your loan.

Before you apply for a loan, there are several documents you’ll want to gather and steps you’ll want to take to ensure the application process goes smoothly. In today’s post, we’ll talk about one specific aspect of the mortgage application process--credit scores.

Credit scores may seem confusing. However, since they can so drastically affect your home loan interest rate, it’s important to understand their implications.

Credit checks and mortgages

One of the things that all lenders will want to see before approving you for a home loan is your credit score. If you’re thinking of applying for a mortgage, odds are that you’ve been working to build credit by paying off loans and credit cards on time each month.

The three main credit bureaus in the U.S. are all required to give you a yearly free credit report. This is a detailed document that outlines your lines of credit, payment dates, and amounts. It’s a good idea to get a detailed credit report and check for errors before applying for a loan.

Unlike a hard “credit inquiry,” a free report does not affect your credit score, so you don’t have to worry about dropping a few points by requesting one of these reports.

When applying for a mortgage, however, lenders will perform a hard credit inquiry to determine your borrowing eligibility. This is a part of the pre-approval process and is typically unavoidable.

This is important to note if you are planning on applying to multiple lenders. Be aware that each “prequalification” and “preapproval” may come with a temporary drop in your credit score.

Since credit inquiries make up a total of about 10% of your credit score, these inquiries can make a difference in the short term. For this reason, it’s a good idea to avoid opening new cards or taking out other loans (such as an auto loan or student loan) within six months of your mortgage application.

If you aren’t sure of your current score, you can always check for free from websites like Credit Karma and Mint.

One last thing to note about credit scores and their relationship to mortgages is that most lenders use a specific type of score known as a FICO score. In fact, every adult in the United States with a credit score will have three FICO scores, one from each major credit bureau.

So, when checking up on your credit score, it’s good to remember that each score will be slightly different and your lender’s score may not reflect what you see online.




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Posted by Poirier Realty on 10/23/2018

While buying a home is a huge decision that should entail a lot of planning and preparation, applying for a mortgage can be surprisingly easy. Just like with other lenders and creditors, a mortgage lender will want to know that letting you borrow money will be a safe investment. Applying for a mortgage is all about ensuring just that.

In today’s post, we’re going to breakdown the home loan application process to help you have the best chances at a smooth and successful mortgage approval. We’ll also define some of the common terms used in mortgages that might leave you scratching your head so you have a better idea of what your options are.

Prequalification and Preapproval

Getting prequalified and preapproved for a mortgaged can both be helpful steps toward securing your home loan. The two terms mean two entirely different things, however.

In order to be prequalified for a mortgage, you typically need to only fill out a simple form (sometimes directly through a lender’s website). On this form, you won’t need to provide specifics or official documents.

Why is this process so simple? Well, that’s because getting prequalified for a loan doesn’t ensure that you’ll actually receive one. Rather, it is simply the first step toward finding out what type of mortgage and interest rates you could receive.

The next step after prequalification is preapproval. To get preapproved, you’ll have to fill out an official mortgage application. Your lender of choice will request a few pieces of information from you, including tax returns, proof of employment for the last two years, and a list of your debts. The lender will also perform a credit check to determine your loan eligibility.

Credit report

At this phase, lenders will also run your credit report. This is a type of “hard credit inquiry” that details your payment history, the number of accounts you have open, and other factors that help make up your credit score.

To secure the lowest interest rate possible, it helps to have a high credit score. So, in the years and months leading up to your mortgage application, focusing on building credit will pay off.

To increase your credit score, you’ll need to focus on paying your bills on time each month. You should also avoid opening new accounts within a few months of applying for a mortgage because this will count as a new credit inquiry. New credit inquiries--including applying for a mortgage--lower your score temporarily, so it’s best to avoid them when possible.

Additional paperwork required for mortgage applications

Not every mortgage application will be the same. Depending on the type of income you receive, you may need to provide different forms of income verification.

Each person will also have to claim different debts and assets. When buying a home with a spouse or partner, it’s important to consider your debts, assets, and credit scores to determine if it’s better to apply jointly or separately.