credit score

Credit Dispute & A Mortgage

 I’m sure if we asked each of you, right now, to name one thing that you think can make you ineligible for a mortgage, you could each name at least two.

 

One of those is a credit dispute.

What exactly is a credit dispute? When you have found a discrepancy or inaccuracy on your credit report and have reported it so it can be resolved, that is a credit dispute. Essentially, you are disputing the credit score that has been provided to you by a credit bureau. And, of course, law requires credit bureaus to release accurate credit scores.

 

 

But that won’t happen to me, right? Actually, discrepancies in credit scores is much more common than people think. There was a study done in 2012 by the Federal Trade Administration that recorded one in every five Americans have some error on their credit report.

That doesn’t necessarily mean your identity has been stolen or someone has taken a credit card out in your name. It can be a simple as an incorrect address or point of contact. Regardless of how big or how small, once you have reported it, it has become a “dispute.”

And a dispute automatically means an inflation of your credit score.

 

It’s all about accuracy

Unfortunately, even though your score has been temporarily inflated while the dispute is being resolved, it may prevent you from getting approved for a loan. And that’s simply because lenders want an accurate representation of your credit report; the one you are giving them is subject to change.

There are just a few things to keep in mind, moving forward with your mortgage. Credit disputes are not resolved overnight. They can take months to handle. And depending on your situation, you may not actually have that kind of time.

If you are in the middle of purchasing a home or refinancing on your home, it is best to speak with a mortgage expert first. The higher interest rate, the additional costs from delaying the closing may not be worth the wait. Especially if it is a very simple dispute, such as one over an address.

 

 

We have said this before, but it is definitely true: everyone’s situation is a unique situation. In order to determine the best next steps, talk to one of our mortgage experts- they can evaluate the situation and may shed some light on the situation that would not have occurred to you otherwise.

 

Total Home Lending

 

 

Natasha Mason

Credit Dispute & A Mortgage2020-09-28T15:14:20+00:00

So, You’re A 1st Time Home Buyer

Top Tips for First Time Home Buyers

You’re on the hunt for your first home. It is an exciting milestone in your life. Not to mention one of the largest financial decisions you may ever make. Don’t fall into the “rookie” home-buyer category. Our advice? The more you know about the process, the easier (and less daunting) it is going to be.

We are here to help. These are some of our “top tips” for you to remember when buying a home.

 

The (sometimes) forgotten credit score

The credit score. Your mortgage company, of course, will pull that score, but it is still a good number know before starting the home-buying process. If there are any mistakes or issues with your score, it is easier to remedy those before you have found that perfect home. Additionally, knowing your score in advance will allow you the opportunity to repair any minor blemishes. One more good thing to know- your mortgage banker (and us!) can sometimes provide tips on how to deal with those flaws.

 

Pre-approval letters are an absolute must

So, what is a pre-approval letter? It’s a letter from your mortgage lender stating what loan amount the borrower (you) is qualified for. So, yes, stating how large of a loan you are able to take out.

Now, why they are important? First and foremost, it allows you to look for homes that are in your price-range. It will save you a lot of time (and potentially a lot of stress) knowing what you can afford and searching accordingly. Then, when you do find a home you want to put an offer on, having that pre-approval letter puts you ahead of the game. While not a guarantee, sellers may take your offer more seriously since you have already been pre-approved for a loan. Not to mention, they may be more willing to lower the asking price, cover closing costs or make other allowances.

 

Down payments made easy

Whether you are a first time home-buyer or are looking to buy again, you have probably been thinking about that “down payment.” The larger down payment you make, the smaller mortgage you have. And, subsequently, the less you have to pay back over the course of the loan.

Is there such thing as “too big” of a down payment? Actually, yes! A 20% down payment is typically viewed as “ideal” by lenders. When you put 20% down, you don’t have to pay private mortgage insurance (PMI) which provides insurance to your lender, in the chance you default on your mortgage. Additionally, it can qualify you for a lower interest rate than someone who makes a smaller down payment.

Realistically, however, 20% is a significant sum of money, especially depending on the house you are looking at. A lower down payment does allow you to become a homeowner faster because you won’t have to save up as much money before buying.

Whether you have the 20% readily available or not, there is one important fact to remember- making a down payment is never a bad investment. Putting money into your home is lower risk than, let’s say, investing it in the stock market. It is a good idea for any homebuyer because it ultimately reduces your risk and allows for immediate home equity. If you have questions or wonder what size down payment is best for you, we recommend discussing your particular situation with your lender. They can provide insight into your unique situation.

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Life happens- be prepared!

You’ve found the house. You’ve been approved for a loan. You’re good to go, right? One thing we always recommend is reserving cash for emergencies. Because, life happens! The last thing you want is to move into your new home and find yourself in dire need of money (and fast!). So, plan accordingly when making your down payment and considering your loan options. It’s better to be prepared!

 

Consider the resale

It’s your first home, you’re excited! You may not be planning to sell in the foreseeable future, but it is important to think about selling your home. If (or when) the time to sell your home comes, will it be easy or difficult to do so? Thinking about the preferences of the “average” homebuyer and keeping those preferences in mind while finding your own home will make reselling the home that much easier.

One huge factor is the school district. Maybe you don’t have children in your home right now, so you’re not thinking about schools. But finding a home in a desirable school district, or even one with a school of choice nearby, could be an added benefit for the resale of your home.

 

Full disclosure and home inspections

While most states do require sellers to disclose any potential problems with the home or the property, they may not always be aware of existing structural issues. Although most purchase agreements are dependent upon a home inspection, you should 100% demand one. Spending the money to hire a licensed professional to inspect your potential new home is the only way to guarantee there are no major structural issues with the home.

What will a comprehensive inspection include? Heating and cooling systems, plumbing and electrical systems, structural integrity of walls, floors, ceilings, foundation and roof. The condition of gutters, insulation, ventilation, major appliances, garage… Finding an issue with any of these things can be extremely costly, so discovering them before signing any paperwork is a huge money saver.

You should also be present for the inspection. Ask questions as you go through the house. Sure, houses need repairs, but there may be a chance the problems with the house will be so expensive it is no longer a home you are interested in. It may seem like a lot of money now to pay for a home inspection, but you could ultimately be saving yourself thousands in the future if the house does have major issues.

 

The hidden costs

Buying a home can feel like a whirlwind. But while you are thinking about a down payment, an affordable monthly mortgage payment and even realator costs, there are a few “hidden” costs that many first time home buyers forget about. Homeowners insurance, property taxes, appraisal fees, moving costs, escrow costs, tax service fee, credit report fee… Just to name a few.

Ask questions. Make sure you are aware of any and all fees, taxes and additional costs you may need to pay before the “buying” process is complete. And, finally, be prepared for just about anything. When it comes to owning your own home, there’s nothing wrong with being a little “over-prepared.”

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By Natasha Mason

So, You’re A 1st Time Home Buyer2020-09-28T15:14:21+00:00
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