Yesterday we covered a little bit of what our surveyed partner agents said about the likelihood of successfully obtaining a mortgage loan, depending on your credit, income history, and the size of your down-payment. Even with 20% down, the majority of our agents agreed that a buyer whose credit was anything less than “Good” would be limited in his/her choice of lender – at the very least.
These days, though, a lot of perfectly legitimate candidates for home-ownership are unable to provide sky-high credit scores. That’s just how the economy crumbles, if you will. Jobs disappear, savings evaporate, and credit takes a hit. Those who would once have been shoe-ins for jumbo-loans suddenly have trouble getting a lender’s attention.
Ultimately, the outcome of your mortgage application is out of your hands. Times are tough and banks are nervous. But a couple of things can up your odds.
1. Plan ahead. Short sales and foreclosures make up a larger share of the market than ever before. “Timing is everything” has always been a hallowed aphorism in real estate, but it’s especially important with sticky transactions like these. Sellers are desperate and the first buyer to have things in order often wins the day. So if you fall in love with a discounted property, don’t delay the pre-approval process.
2. Know thy score. You may have heard that every time you check your credit, your score gets “dinged”. It’s not right, it’s not fair, but it happens. So in the early stages of house-hunting, it may be in your best interest to check your score yourself (so you know roughly where you stand) and make some copies. If things get really serious the bank will run its own check, but at least you won’t be getting “dinged” as many times.
3. Demand your due. If you pay rent, insurance, or cell phone bills, you can use them to help boost your credit. Though most credit checks DON’T take the timely payment of living expenses into consideration, they can provide valuable insight into a person’s ability to keep up with a mortgage – and under Federal law, a lender is required to look at them IF you request that they do so. (A fairly recent article in the Los Angeles Times covered this topic in more depth – read it here.)
4. Get an Agent. They’ve been through this over and over (our Movoto partner agents close at least 10 deals a year and must have at least three years in the business, so that’s a lot of experience right there), and they may know which lenders are the best fit for you.
Good luck out there.