credit - The Mortgage Porter

How do Inquiries on my Credit Report impact my Mortgage Approval?

February 21, 2014 by Rhonda Porter Leave a Comment

When you apply for credit, it may appear as an inquiry on your credit report even if you decide not to proceed with the credit or debt you applied for. The credit reports that mortgage companies use will show the inquiries going back 120 days.

Why does a lender care if you have credit inquiries – even if you never proceeded to take the credit that was offered to you? Inquires to your credit appears as though you are shopping for credit and therefore may be taking on additional debt. Additional debts may impact your ability to make payments on your new mortgage.

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Filed Under: Credit & Financial Strategy Tagged With: credit, credit tips

Don’t let these things HAUNT your Preapproval

October 31, 2013 by Rhonda Porter Leave a Comment

I encourage anyone who is considering buying a home to start the preapproval process as soon as possible. Regardless of if you’re not planning on buying for a year or you think your credit, income and assets are prefect – you never know what underwriters may find lurking in your application.

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Filed Under: Just for Fun, Residential Purchase, Reverse Mortgage Tagged With: credit, debts, deposits, income, preapproval, qualifying

Reader question: What can we do during the waiting period?

September 26, 2013 by Rhonda Porter 4 Comments

If you’ve had a bankruptcy, short sale or foreclosure, there is a waiting period that must take place before you can start the mortgage process. Wait periods vary depending on the type of derogatory event and the mortgage program. This reader’s excellent question is from an article I recently wrote about FHA’s “Back to Work” program.

We will reach our 1 year mark on January 30. Can we do anything before then to get the process started or do we have to wait until January 31?

FHA unveils “Back to Work” Guidelines for those who had a Short Sale or Foreclosure

August 20, 2013 by Rhonda Porter 24 Comments

UPDATE: Please visit our FHA Guide for current FHA guidelines and loan limits.

HUD released Mortgagee Letter 2013-26, also referred to as “Back to Work” featuring enhanced guidelines for home owners who lost their homes via short sale or foreclosure due to financial difficulties. “Back to Work” shortens the required wait periods for borrowers wanting to buy a home again. From ML 2013-26:

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Filed Under: Mortgage Programs Tagged With: back to work, bankruptcy, buying again, credit, fha, foreclosure, short sale

What you don’t know about your credit report may haunt you

October 30, 2012 by Rhonda Porter Leave a Comment

Does your credit report have skeletons hiding in the closet? Many are startled at what is lurking on their credit report when they’re getting ready to buy or refinance their home.

If you’re a long-time subscriber to Mortgage Porter, you’ve probably read some of my tips on how to improve your credit score. Here’s a quick overview of five frightening credit report surprises.

Your on-line credit score may not be what it appears. Your credit report and scores are available on line by the “big three” credit bureaus. However, don’t be fooled by your on-line credit score which probably is a different number than what a mortgage company (or other lender) will pull. Why? Basically, there are different scoring modules created for the end user (for example a mortgage company or if you’re buying a car).

Credit inquiries lingering behind. Your credit report will reveal inquiries that were made over the past 120 days. Each inquiry will need to be addressed with a written letter explaining each inquiry and whether or not new credit was obtained. If new credit has been obtained and needs to be added to the loan application with the debt being factored into the debt to income ratios.

Co-signed college student loans. If you co-sign for your childs student loan debts (or any debts) chances are you may get to qualify factoring that debt into your ratios. This can sometimes be resolved if you can document your child (or whoever you co-signed the debt for) has made payments on their own for the last 12 months.

Charge-offs. Consumers often assume that because a debt has been “charged off” that they’re off the hook for the remaining balance, which typically is not true. Lenders will often treat the balance of the charge off that is on the credit report as a “collection” which will probably need to be paid off or resolved prior to obtaining a new mortgage.

Disputed accounts. You disagree with what is being reported against you on your credit report and do what most responsible people would do: file a dispute. Only to find out when you’re getting a mortgage, that the lender will not close on your transaction unless the reported dispute is removed. Torture!

What may be buried in your credit report is just one more reason why you should start your loan approval process sooner than later.

If you’re considering buying or refinancing a home anywhere in Concrete, Fall City, Forks, Auburn (originally incorporated as the town of Slaughter) or anywhere in Washington state, I’m happy to help you!

Filed Under: Credit Scores and Reporting Tagged With: charge offs, co-signing, credit, dispute, inquires, loe, score

How co-signing on a debt impacts qualifying for a mortgage

June 13, 2012 by Rhonda Porter Leave a Comment

As a Licensed Mortgage Originator, I often see credit reports where the borrower has cosigned on a debt for a family member or friend. You may be a parent co-signing on your child’s student loans to help them get a better rate, helping your brother buy a car by co-signing the lease or auto loan or perhaps co-signed on a family members mortgage so they can buy a home. They’re going to be responsible for the debt and making the payments and you’re helping them out. Often times, folks don’t realize how this good deed may impact them qualifying for a mortgage down the road. [Read more…]

Filed Under: Underwriting and Qualifying Tagged With: co-signing, credit, debt to income ratios, underwriting

How Disputes on Your Credit Report May Impact Obtaining a Mortgage

October 20, 2011 by Rhonda Porter 1 Comment

Reviewing your credit report and disputing information that is being wrongly reported about you is your right under the Fair Credit Reporting Act. Obtaining your credit report and making sure that it’s accurate is financially responsible and your duty to protect your credit. And the Federal Trade Commission provides you tips on how to dispute items on your credit report. Did you know that lenders may not accept a credit report where it indicates there is a disputed item?

It doesn’t matter if you have perfect credit or a low loan to value, Fannie Mae and Freddie Mac guidelines are forcing lenders to provide a credit report without disputes. I’ve recently had transactions where the borrower doesn’t recall disputing anything and the debtor doesn’t have record of the dispute yet this “dispute” needs to be removed from the credit report or the lender/bank will not accept the loan. This is one reason why anyone considering a mortgage for refinancing or purchasing a home should obtain a copy of their credit report very early on. It can take a great deal of time to have disputes removed if a borrower does this on their own.

The other option is for a “rapid rescore” which whittles down the process to days. The irony in this is that rapid rescore is not free and it is the credit bureaus and reporting agencies who profit when this service is done – I really have a problem with this when my client and the creditor state there are no disputes of record yet somebody has to pay to have these items quickly removed to accommodate a closing date. Often times, the lender absorbs the cost of the rapid rescore however this eventually drives up the overall cost of doing business and eventually, the consumer pays.

In my opinion, this is something that Fannie Mae and Freddie Mac need to change pronto. Well qualified borrowers should not have to go through these hoops or have their mortgage denied. A simple written letter of explanation signed by the borrowers and possibly the creditor *should* suffice instead of requiring the credit report not show any sign of a dispute. Apparently back in 2009, Fannie was reviewing their policy however, I’m not aware of any significant changes.

If our government wants to help the housing industry and our economy, this practice needs to stop now.

Filed Under: Credit Scores and Reporting, First Time Home Buyer, Rant Tagged With: credit, credit history, dispute, qualifying, underwriting

Can I buy a $620,000 home with a low credit score?

October 27, 2008 by Rhonda Porter Leave a Comment

This morning, I received this email:

My wife and I found a house we are in love with. I wanted to write and tell you our situation, maybe you can tell us if we are even in the “ballpark”. The house we like is 620,000. We have 20% to put down. We have very little debt and well documented income. I have a low credit score, 660 or lower. Is this worth pursuing or is the credit score too low?

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Filed Under: Home Buying Tagged With: credit, fha, home buying