Tell Your Story - Mind Your Credit

When buying a new home, the first usual topic of discussion routinely surrounds a client's credit, the financial decisions that have gotten them to this point so far, and what needs to happen to get them to the next step in their life.

Why is credit so important after all?  Don't they know I'm a hard working person and have learned from my mistakes?  Not necessarily.

It's Not Personal

Your mortgage consultant will do their best to make sure that your file is submitted to your qualifying lender in the best light possible.  Upon approval, the lender will send the file to underwriting to be scrutinized by the underwriter.

An underwriter's main job is to ensure that the decision to lend you money is not putting the company at a large enough risk to possibly lose their money.  Understand that all lending practices are based on calculating risk, thus the importance of credit-worthiness.  With the mortgage industry, you are dealing with quite a large sum of money, and many times the criteria for full "clear to close" can seem tedious.

The underwriter will never meet you.  They will never share a phone conversation with you.  They will look at your proof of income, job history and banking history to ensure that what you are saying to them is true.  They will never know that you are a changed person; willing to work your tail off to never make a late payment again; nor will they care.

They are in place to calculate the risk involved with issuing you a loan that you will require to purchase real estate.

There Is Light at the End of the Tunnel

You may be asked to obtain an extra pay stub, or an extra months bank statement.  This is solely to ensure that they are making the right decision.  In most cases, I'm glad to see conditions come back asking for more information.  As long as you can provide said documentation, your chances of acquiring your loan increase dramatically!

Avoid The Hassle - Fix Your Credit Now

Thinking of purchasing your very own piece of Houston real estate in the future?  Be sure that your credit score is the best it can be; aim to have an equifax score above 630.  If you can achieve this milestone, the process of acquiring your home loan will be much more enjoyable.

One last Tip

Equifax has a fantastic program called Score Watch.  In a nutshell, it will email you when your score changes and even comes with a free credit report.  The cost is very affordable as well, tacking a mere $9 a month to your monthly finances.  $9 a month isn't much at all when you look at the benefits of having great credit to purchase your next home.

• Equifax Score Watch
• Credit Explained
• Debt To Income Ratios Explained

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