Credit Scores: What You Really Need to Know

Remember that house you wanted a couple of years back but couldn’t afford?

Well, with the current housing market having turned in favor of buyers, now might be a very good time to take another look at possibly purchasing that property.

There is a drawback, though.

The other side of the coin is that credit terms have been tightened to prevent another housing market meltdown like the one we went through recently.

Understanding your credit score is the key to taking advantage of today’s situation.

In general, most mortgage lenders pull data from three credit bureaus: TransUnion, Equifax, and Experian.

Each bureau provides a score, and lenders use the average of the three scores to help determine whether they will let you borrow money.

Each bureau uses a similar scoring model.

The two biggest factors that influence the score are recent late payments and debt-to-limit ratios.

Recent Late Payments

If you are late on payments with your existing debt, why in the world would a lender want to step up to the plate and give you more credit?

If a buyer has a legitimate reason or explanation as to how such a situation occurred and why it is unlikely to happen again, it will likely go a long way toward getting a mortgage approved.

Debt-to-Limit Ratios

The debt-to-limit ratio is a comparison of how much you owe compared to how much you have available on a given line of credit.

Too many maxed-out credit cards will give a lender the impression that you are overextended and that you may need to pay down some debt prior to getting more credit. Maxed-out cards also tend to lower your credit score.

Why Property Buyers Need a Good Real Estate Attorney

The price you pay for a knowledgeable real estate attorney when buying a property could be the best money that you ever spend. There are several reasons for this – one being that they have no interest in the transaction other than to see that you understand what is going on and to see that your best interests are protected.

You might be thinking that in a real estate transaction your real estate agent and loan officer are supposed to be doing this, which is true, but while most of those people do have your best interests in mind, they may come across situations that they have never seen, from a legal perspective, and will seek counsel of a real estate attorney anyway.

Another reason why you should have an attorney, especially from a home financing perspective, is to help you understand the terms of your mortgage, both at the closing table, and what could happen to it down the road.

The vast majority of mortgage professionals are looking out for your interests because that is how they do business and build a relationship with you. However, many people who are in the process of losing their homes today, especially those who bought them in the days of very loose lending guidelines, can look back at the paperwork and see that they got something other than what they thought they were getting. Many of them had no attorneys helping them.

A credible lending professional who has nothing to hide will welcome this party into the transaction.