In the last few months we have seen mortgage rates on the rise. With rates being about one percent higher since May borrowers who were on the fence to buy have started to make a move now. Borrowers who haven’t refinanced in the last few years are now trying to refinance before they see interest rates move higher.
You may think the recent rise in interest rates could potentially make your mortgage payment unaffordable or ineligible to qualify for a mortgage. However, a high percentage of loans are denied more due to credit issues. In order to qualify a borrower for a mortgage the first document a mortgage professional will review is a tri-merge credit report. This tri-merge credit report will allow all 3 credit bureaus to report all credit information on one report. Aside from seeing the credit history, current debts, remaining balances, and minimum payments, it will also reflect the number of inquiries in the last 120 days. Every time a creditor pulls credit an inquiry is reported to the credit bureaus. Having several inquiries on your credit report could have a negative impact your credit score. At times a 1 or 2 point difference could affect a borrower’s eligibility to a specific program, raise their closing costs, or make a difference in what interest rate is available. The credit report will also disclose any type of short sales, foreclosures, collections, or bankruptcies. Depending on the derogatory credit issue a borrower may need to wait a period of time in order to apply for a mortgage.
Credit reports also show any accounts that are currently in a dispute status. Did you know that if there is a dispute on one of your accounts the lender will require the dispute to be resolved before a loan can be fully approved? Having a dispute on your credit report not only slows down the process because the lender requires this to be removed, but it could impact your score to be lower. Another critical step to reviewing credit is determining a borrower’s debt-to-income ratio. The debt-to-income ratio is calculated by taking your minimum monthly payments listed on your credit report plus any other liabilities not listed on your credit report (ex: child support, alimony, insurance, taxes and assessments on other real estate owned), add that to the new mortgage payment (including taxes and insurance), and divide your total debt by your monthly gross income. If you are unsure of your current credit situation it's important to speak with a mortgage professional you can trust. We can look at your complete financial picture and assist you so that your loan approval is not hindered by your credit report.
Find out what's happening in La Grangefor free with the latest updates from Patch.
Priscilla Land
Find out what's happening in La Grangefor free with the latest updates from Patch.
Prestige Mortgage Corporation
130 N La Grange Road, Suite 101
La Grange, IL 60525
Direct: 708-566-0661
