Credit Improvement During Mortgage Process

Advice On How To Tackle Credit Improvement During Mortgage Process

Credit Improvement During Mortgage Process should be done prior to mortgage loan application.

Here are the reasons why:

  • The reason being is because mortgage lenders will use the credit scores and credit report initially submitted with the mortgage loan application and whether your credit scores increases or decreases has no bearing on your mortgage process.
  • Credit scores fluctuate month after month so if your credit scores has drastically gone up during the mortgage process, it does not matter because the middle of the three credit scores that was used to qualify you when you first got pre-qualified is the credit scores that your lender will be using throughout the entire mortgage process.
  • Both home buyers who need to qualify for a home purchase mortgage and homeowners thinking of refinancing their current home loans need to think about credit improvement during mortgage process prior to actually submitting their mortgage loan application for processing and underwriting.
  • It does take time to work on credit improvement so borrowers should plan months ahead if they are trying to get their credit improvement done.

Borrowers Need To Pay Special Attention To Their Credit Scores And Credit Report Prior To Applying For Mortgage

Many borrowers think that just because they meet the minimum credit score requirements to qualify for mortgage that they will automatically meet the credit requirements to qualify for a mortgage. This is not always the case. Credit scores are important but it is just a piece of the overall credit requirements to qualify for home loans.

Here are other factors that goes into qualifying credit in the mortgage process:

  • Credit tradelines are viewed and taken into consideration by mortgage underwriters: Just because you open up a secured credit card with a $500 credit limit does not mean that you have credit tradelines.
  • A credit tradeline is a credit account that has been seasoned for at least one year and preferably two or more years.
  • Late payments in the past 12 months is considered serious and credit risks.
  • Most mortgage lenders do not want to see any late payments in the past 12 months.
  • You can only have one 30 day mortgage late payment in the past 12 months and multiple 30 day mortgage lates will disqualify a borrower from qualifying for a mortgage.
  • Late payments after bankruptcy, deed in lieu of foreclosure, foreclosure, and short sale can be deal killers and most mortgage lenders will not accept any borrowers with late payments after bankruptcies and/or foreclosures.
  • Credit disputes on non-medical outstanding collections and charge off accounts are not permitted during the mortgage process.
  • Maxed out credit cards can plummet a borrower’s credit scores so it is best that borrowers pay down their credit card balances prior to applying for a home loan.

Borrowers Who Need Credit Improvement During Mortgage Process

Bad credit affects millions of consumers today. Most consumers were affected by the 2008 real estate and mortgage meltdown and tens of millions of consumers had filed for bankruptcy or had a housing event such as a foreclosure, deed in lieu of foreclosure, or short sale. There are still tens of millions of Americans who has not yet recovered from the Great Recession of 2008 and are in jobs where they are overqualified for. Many successful business owners have closed their businesses and sought wage earner jobs while others completely changed fields and went back to school to learn a new trade. One of the most industries affected by the 2008 Great Recession was the mortgage industry followed by the real estate and construction industries. Millions of loan officers left the industry for many years and some returned to become loan officers again to find out that the whole mortgage business has went through a major overhaul. Mortgage loan originators now needed to get licensed, pass state and federal criminal background investigations, and pass credit checks. Loan officers now had to enroll and pass a 20 hour pre-licensing NMLS course and apply for state licensing in every state they want to originate mortgage loans.

Mortgage Industry Now Versus Before Great Recession

Getting a residential mortgage loan is now different than it used to be. The SAFE Mortgage Act was implemented and launched. FHA, VA, USDA, FANNIE MAE and FREDDIE MAE have come up with new rules and regulations. Credit Improvement During Mortgage Process needs to be done months prior to applying for mortgages.

Here are some of the changes of new mortgage rules and regulations:

  • Minimum Credit Score requirements for FHA is 580 FICO and for Fannie Mae and Freddie Mac is 620 FICO
  • Maximum debt to income ratios for FHA Borrowers with credit scores of higher than 620 FICO is 46.9% DTI front end ratio and 56.9% DTI back end ratio. Under 620 FICO credit scores debt to income ratio requirements on FHA Loans is 43% DTI
  • Outstanding collections and charge offs do not have to be paid off to qualify for home loans unless the lender has lender overlays on collections and charge off accounts
  • 2 year waiting period after Chapter 7 Bankruptcy discharged date for FHA Loans, VA Loans, and USDA Loans. 4 year waiting period to qualify for Conventional Loan after a Chapter 7 Bankruptcy discharged date.
  • 4 year waiting period after a deed in lieu of foreclosure, and short sale to qualify for Conventional Loans.
  • 7 year waiting period to qualify for conventional loan after a standard foreclosure.
  • 3 year waiting period after a foreclosure, deed in lieu of foreclosure, short sale to qualify for a FHA Loan and USDA Loan.
  • 2 year waiting period to qualify for a VA Loan after a Chapter 7 bankruptcy discharged date and 2 year waiting period after a short sale, deed in lieu of foreclosure, and foreclosure to qualify for a VA Loan.
  • There is no waiting period to qualify for a FHA Loan after a Chapter 13 Bankruptcy discharged date and you can qualify for a FHA Loan one year into a Chapter 13 Bankruptcy repayment plan with the approval of the Chapter 13 Bankruptcy Trustee.
  • There is a two year waiting period to qualify for a Conventional Loan after a Chapter 13 Bankruptcy discharged date.
  • There is no waiting period to qualify for a FHA Loan after a Chapter 13 Bankruptcy dismissal date.

Can Credit Improvement Be Done To Qualify For Mortgage?

Most of our borrowers who contact us are ready to become homeowners and come to us for advice in credit improvement so they will be qualified for a mortgage in the next few months. There is no charge in contacting us. Our national team of mortgage professionals will help any home buyer who needs help getting qualified for a loan program that suits their needs. Please contact Gustan Cho at The Gustan Cho Team at CrossCountry Mortgage NMLS 873293 at 262-878-1965 or you can text Gustan Cho on his cell at 262-716-8151 for faster response. You can also contact The Gustan Cho Team at CrossCountry Mortgage via email at gcho@gustancho.com.  Gustan Cho and all of his loan officers are available 7 days a week, evenings, weekends, and holidays to take on your call and answer any questions you may have. Whether you have low credit scores, bad credit, outstanding collection accounts, charge off accounts, judgments, prior bankruptcy and/or foreclosure, tax liens, late payments, or late payments after bankruptcy and/or foreclosure, please do not hesitate to contact us. We are confident we can help you secure a home loan sooner than you may think it is possible.

Qualifying For Mortgage With The Gustan Cho Team at CrossCountry Mortgage

Over 75% of borrowers who contact Gustan Cho NMLS 873293 of The Gustan Cho Team at CrossCountry Mortgage NMLS 3029 are borrowers who gotten a last minute mortgage loan denial or are going through a tough mortgage process with their current lender and cannot meet their closing date on their home purchase. There is no reason why any borrower with a pre-approval should not be closing on their home loan and going through a major loan process. There is only one reason and one reason only for this. The loan officer did not properly qualify the borrower or did not know their mortgage guidelines or their company’s overlays. CrossCountry Mortgage NMLS 3029 is a five plus star national Fannie/Freddie/Ginnie Mae Direct mortgage banking firm licensed in 50 states under the leadership of our President and CEO Ronald J. Leonhardt Jr. that has no overlays on government and Conventional Loans and known for its 21 day closings. CrossCountry Mortgage has a national brand name for its excellence in customer service and customer satisfaction policy strongly instituted by President and CEO Ronald Leonhardt who is respected not just by The CrossCountry Mortgage Family, but respected by ALL mortgage industry professionals for his top leadership abilities and knowing the importance of not just closing loans, but closing loans on time. We have a policy at The Gustan Cho Team at CrossCountry Mortgage that our loan officers need to be available at all times.  Gustan Cho and The Gustan Cho Team at CrossCountry Mortgage are available 7 days a week, evenings, weekends, and holidays.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

Comments are closed.