Mortgage Smarts 101

Perhaps you heard about it in the news. Banks are getting tighter about lending money. This is all related to subprime lending and predatory lenders. Watch out for the rip off artist. They are still out there.

A client of mine recently purchased a home. This client will be making her first payment in a week or two. That's how recently she purchased her home. Already she has received a mailing that sounded to good to be true. This lender sent her a letter that at first she thought looked like it might be from her lender. It told her how they can save her a lot of money. Fortunately she was smart and called her mortgage banker who showed her the flaws in this plan that this lender had sent her and showed her that the lender in question was not her lender, just pretending to be.

In my junk mail and sometimes in my in-box, I receive many offers to purchase my mortgage. These letters in my email are immediately trashed. That is what I urge you to do. Stay away from dot com lenders. Stay away from many of the mortgage brokers out there and look instead for mortgage bankers or real banks that you can visit in person.

Mortgage Bankers differ from mortgage brokers in one major way. There is no middle man or woman between the Mortgage Banker and the funding source. It is the same with banks. Mortgage Bankers and Bankers will not usually direct you to adjustable rate mortgages or loans that will strangle you.

Another great tip when looking to purchase property is to pull your credit yourself from the three major credit bureaus - make sure to order your credit score at the same time. It costs a few bucks, but it's worth it. You find out what your credit looks like and if you have problems. If you do in fact have problems, take care of those before considering to buy property. You want your credit to be the best it can. If you do not do this vital step - you will likely pay a lot more for your interest rate.

On this same note, checking your credit and your credit score prior to applying for a mortgage allows you to talk to the lender without having them run your credit first. The more your credit is ran by lenders the lower your score becomes. Remember you want the highest score you can get. Do not damage that number by having your credit checked unnecessarily.

I had one client that went to a particular mortgage broker. In their infinite wisdom, they decided to ask all of their lenders to take a look at the credit report. Rather than ordering one credit report and sending a copy of the report to each lender, this mortgage broker ordered a credit report for each of the lenders they work with. In all there were over 50 credit reports ordered in a two week span of time.

My client could not get a loan because her report had been ran so many times. She had to wait two years for the dust to settle. I am happy to report that she subsequently went to the mortgage banker I recommended and got her loan without any hassle.

Another piece of advice: You are wanting to purchase the property of your dreams. An offer has been written and accepted. Great news. You have been pre-approved for the loan. Wonderful. You decide that you are going to need new furniture for your new home, so before the sale closes you purchase several items on credit. Oops, you should not have done that. The lender orders a second report to finalize approval and you have new debt. Suddenly you find that you are no longer qualified for that loan. You lose your dream house. Don't let this happen to you.