Should I Do Credit Repair To Qualify For Mortgages?

Advice On Credit Repair To Qualify For Mortgages

Credit Repair To Qualify For Mortgages is highly recommended for home buyers planning on buying a home but have prior bad credit. Credit Repair does work and depending on the credit consultant you use, derogatory credit tradelines can be removed and deleted off your credit report. I have personally seen collection accounts, charge offs, judgments, tax liens, bankruptcies, foreclosures, short sales, and all types of derogatory credit tradelines deleted off a consumer’s credit reports. However, mortgage lenders will find out about deletions of public records such as bankruptcies, foreclosures, tax liens, child support payment delinquencies, and judgments when they do a third party national public records search during the QC Underwriting Review Process.

Credit Repair To Qualify For Mortgages: Public Records Deletions

When you apply for a mortgage loan, you need to complete a 4 page mortgage loan application called the 1003 mortgage application. The last page of the 1003 mortgage application, there will be a series of questions that will be asked such as have you filed bankruptcy, have you had a short sale, have you had a foreclosure, do you have any judgments, are you a party to a lawsuit. You need to be truthful when you answer these questions. Credit Repair does work and I have seen countless of consumers who have had public records such as bankruptcies, multiple foreclosures, and multiple judgments deleted off their credit report from all the three credit bureaus. Unfortunately, if you mark that you have not filed bankruptcy or had foreclosure but in fact you did but are marking NO because it has been deleted off on your credit report, the mortgage lender will find out during the final stage of the mortgage approval process, which is the QC Underwriting Review Process. Once the mortgage loan application is about to get a clear to close or with some companies after the loan is cleared to close, the file goes to the Quality Control Division of the mortgage company where a QC underwriter will contract with a third party vendor to do a national public records search. The third party vendors, companies like Lexis Nexis or Data Verify, will do a thorough search of public records at the national level and any public records on the mortgage loan borrower or borrowers will show up. All public records deletions from credit repair will show up on public records search.

Why Do Credit Repair To Qualify For Mortgages?

The good news on credit repair is that unpaid collection accounts and charge offs or delinquent accounts that are deleted off the consumer’s credit report will not register on public records and nobody will find out about it. Mortgage lenders do not just look at the borrower’s credit scores but will look at the borrower’s overall credit history. You do not have to pay off outstanding unpaid collection accounts to qualify for FHA Loans. Home Buyers can qualify for FHA Loans with outstanding collection accounts and charge off accounts without having to pay them. Medical collection accounts and charge offs are exempt from debt to income ratio calculations. Non-Medical collection accounts with an aggregate total outstanding unpaid collection account balance of greater than $2,000, 5% of the outstanding balance is used to calculate the borrower’s debt to income ratio. On a $10,000 outstanding unpaid collection account balance, 5% of the $10,000 or $500, will be used as a monthly debt of the borrower even though the borrower does not need to make any payments. By deleting the collection account through credit repair, the 5% calculation of the outstanding debt will no longer apply since it has been removed off the credit report. It needs to be removed by all three credit reporting agencies.

Choosing The Right Credit Repair Company

Like other industries, not all credit repair companies provide the best services. There are hundreds if not thousands of credit repair companies. Choosing the right credit repair company can be challenging. Do not fall in to fancy websites or ads with fake testimonials. The place to start shopping for the best credit repair companies would be to ask for referral by realtors, mortgage brokers, bankers, attorneys, or other professionals who use credit repair services. I myself use only one credit repair consultant who has helped hundreds of my borrowers who had less than perfect credit and would refer even my own family. Most mortgage brokers work closely with credit repair companies and whoever your mortgage lender is, you can ask them who they use.

Credit Repair To Qualify For Mortgages Takes Time

Home Buyers who are thinking to start credit repair to qualify for mortgages need to realize that credit repair takes time and you cannot be going through credit repair during the mortgage process . Mortgage lenders prohibit credit disputes during mortgage process . You are allowed to have credit disputes on medical collection accounts with outstanding balances and non-medical collection accounts with zero balances. However, you cannot have credit disputes on non-medical collection accounts if the total of the outstanding unpaid collection balances are over $2,000. Non-medical collection accounts credit disputes needs to be retracted in order for the mortgage process to proceed. Another major issue with retracting credit disputes with outstanding collection account balances is that once you retract the credit disputes, your credit scores will drop. How much will it drop? It can drop anywhere between 5 FICO points to over 100 FICO points. Mortgage loan officers should not issue pre-approval letters if the mortgage loan applicant has credit disputes. Many times borrowers who qualify for a mortgage loan with credit scores may meet the minimum credit score requirements to qualify for a mortgage after the retraction of credit disputes.

If you have low credit scores and prior bad credit and need help in qualifying for a mortgage loan, please contact us 262-716-8151 or email us at gcho@gustancho.com. We are different than other mortgage lenders where we will not tell you come back in a year after you have improved your credit. Our staff will guide you and help you in getting your credit to where it needs to be and work with you to make the American Dream Of Home Ownership a reality. There are many times where we help those who want to be homeowners for many months so they can qualify for a home loan and get pre-approved.

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.

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