What is the Process for
Qualifying For a Mortgage Loan?

In today’s market, an “affordable” home is not so much determined by sales price as it is by the financing which translates that price into a monthly payment.  When you make the decision to buy a home, your first step should be to set a housing budget, including starting to shop for a mortgage loan.  Only after that is completed should you start shopping for the house that fit the budget.  Even though there are many ways to qualify to buy a home, make sure the monthly payment makes sense for you.  How large a payment you qualify for will depend upon a variety of factors.  These factors include your credit history, the size of the down payment you can make on the property, and your length of employment.  Everyone’s circumstances are different.

One of the things that a loan officer will discuss with you is your credit score.  The FICO (Fair, Isaac & Company) credit score has become an important part of the pre-qualification process.  When you know what your credit score is, you have an opportunity to make changes that will affect your ability to obtain financing when you need it.  Even before you speak with a loan officer, you can get a copy of your credit report and FICO score. You can get this information from a variety of sources.  The three big credit bureaus will send this information to you for little or no cost. They are: Equifax Information Services, LLC; Experian; and TransUnion LLC Consumer Disclosure Center.

If there are errors on the report, or surprises, you should contact your creditors to make corrections or negotiate settlements.  You should also notify the credit bureau of any disputes.  Legitimate black marks on a credit report won’t disappear quickly.  It normally takes seven years (ten years for bankruptcy).  It has been our experience that lenders will give recent responsible activity the consideration that it deserves.  The farther back in time the black marks on your credit report are, the less likely they are to cause major problems when you try to arrange financing for a new home.

Maintaining Good Credit

  • Pay bills on time
  • Maintain 2 to 4 credit cards
  • Close unused credit cards
  • Keep the balances well below the limit
  • Pay more than the minimums due
  • Establish a long-term credit history

Damaging Your Credit

  • Too many credit cards or no credit cards
  • High non-mortgage debt
  • Delinquent accounts
  • Frequent job and/or address changes
  • Bills marked “noncollectable”
  • Bankruptcy