Archive for March, 2008

Credit Score Requirements for 2008 Mortgages

Wednesday, March 12th, 2008
Your credit score in 2008 is very important when it comes to buying a house. Heck your credit score is important when it comes to getting a loan period these days. Since the sub-prime mortgage meltdown, Wall Street has tightened up on what kinds of mortgage paper they will buy. Most loans are run through automated underwriting engines. The underwriting engine will either say yes or no, but here is the funny thing. Even though the engine says yes, the investor may have its own internal guidelines that would overrule an automated approval. This is not normal in the loan business. During the past years when you got an automated approval with either Freddie Mac or Fannie Mae underwriting engines you were golden.

Mortgage Insurance Companies
Since all the tightening up in the lending industry, the companies that insure these loans have tightened up as well. The reason for this is all the claims that are being filed as a result of defaults on mortgage loans. I have discussed in other articles how everything basically is based on risk, well so is insurance. If the insurance company sees a pattern with certain credit scores and loan types they will tighten up on the underwriting guidelines for those specific borrowers. Currently you cannot get a 100% Conventional prime loan unless you have a 680 credit score. Previously it was below 600 credit scores, but you had a higher interest rate. Currently they will just deny you of the loan, because they cannot get the loan insured. This mortgage crisis will affect everyone, including people with good credit. They will be able to get loans, but the loan guidelines will be more stringent.

FHA loans
FHA loans have been around since 1935. This government entity is the single largest insurer of loans in the world. FHA has baled the housing industry out of the tar pit right after the great depression. It looks like the same savior will be at it again in 2008. FHA loans have not tightened up, but again the investors that buy this paper have. Its common for banks to sell there loans to other banks. This is just a common practice these days. The only problem is the big banks buying paper from the small banks have really tightened up on what type of loans they will buy. With this being said, the entire process is getting tough all around.

Credit Scores
Your credit scores will either make you or break you when it comes to getting credit extended to you. With the disaster in the housing market, you can count on it getting even tougher with credit score requirements. So if you are in the market to get a home, I would recommend getting a copy of your free credit score report and see where your scores stand. Your score will be extremely important in this current lending market.

About the Author: Mike Clover is the owner of is the one of the most unique on-line resources for free credit score report, fico score, Internet identity theft software, secure credit cards, and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness.

What Not To Do During Home Buying Process.

Wednesday, March 5th, 2008

The home buying process can be tricky at times. There are definitely some things you need to avoid during this process. I have seen all kinds of nightmares because someone did not listen to their loan officer. I will give some you exactly what not do in this articles so your loan and credit score is not affected.

Late payments
During the home buying process make absolute sure you are not late on anything. If you have a late payment on anything that reports to your credit report your credit score will be affected. In return an underwriter will see this and your loan could be dead as a result. Late payments on any obligations that reports to your credit report will drop your score between 100 to 150 points. “Don’t be late on anything.”

Don’t buy anything on Credit
While you are going through the home buying process you don’t want to take on anymore debt, this could affect your loan. That means don’t go out and put furniture on credit for your new home until you have closed and funded on the loan. Don’t put anything on credit period.

Don’t co-sign on a loan for anyone
While you are in the process of getting a loan, don’t co-sign on any note. This could cause your loan to get denied. When you co-sign on a loan, then you are equally responsible for the new obligation. This could lower your credit score, and also cause income to debt ratio problems as well.

Don’t quit your JOB
Ok, you might think this is a joke, but we have actually had borrowers quit their job thinking we would not find out. Well, guess what we will. Don’t quit your job during the home buying process; underwriters do last minute job verifications before loan documents go out to the title company for a closing.

I hope this has been advice you got prior to doing any of the above. You could definitely have some major problems. Maybe you have not even started the loan process, and this will be good advice for you. What ever your situation is, make sure you are on top of your credit report and scores. Your credit scores could be affected by any of the topics discussed in the article.

Learn the “Correct” way to buy a home so it’s not a disaster.

Tuesday, March 4th, 2008

Buying a home is the single biggest purchase you will ever make. Surely you want to make sure it s a smooth process. We are a society that likes to touch and feel. Kind of like trying to buy a car, you want to take it for a test spin before you buy. Unfortunately that is not the way it works in the real estate arena. You will find that most “seasoned real estate” professionals will not jump in their car to show you a home until you have secured financing with at reputable lender. With the current credit crunch and liquidity problems with banks, you better make darn sure you can secure financing. Even individuals with good credit are having issues getting financing secured. Here are the steps to follow:

Get Pre-Approved not Pre-qualified.
Getting pre-approved means you have a lender verify all documents to support the loan approval. Most lenders will run you loan through a automated engine. Once everything is verified and ran through either Fannie Mae or Freddie Mac engine you should be approved at that time.Pre-qualfied means that someone has taken your information over the phone and has not verified anything other than your credit report. This type of approval does not mean jack hill of beans.

Meet with your lender whom has approved you.
This is an important part of the process, so there is no misunderstanding on loan terms. Make sure you understand your payment interest rate etc………..

Find a reputable and seasoned Realtor.
Finding a seasoned reputable Realtor is so important; the reason is they need to understand the current market, and what to look out for on your behalf. A Realtor job is to look out for your best interest. Once you have been pre-approved, then the Realtor will have a better understand as too what type of negotiation process to start on a home.

This process is the best way to assure your home buying process is as smooth as possible. I am sure you hear of the nightmares out there, typically this is because the proper process in not followed. The end result is not good one. Lenders are looking at your credit scores very close now. Make sure before you start the process you pull a current copy of your credit report. That way you already have a idea where you stand.

Author: Mike Clover

Disclaimer: This information has been compiled and provided by as an informational service to the public. While our goal is to provide information that will help consumers to manage their credit and debt, this information should not be considered legal advice. Such advice must be specific to the various circumstances of each person's situation, and the general information provided on these pages should not be used as a substitute for the advice of competent legal counsel.