Tag: pre-approval

Credit Myth #4: Your Job and Income Contribute to Your Credit Score

Posted on by Evan in Swanson Home Loans Blog - Mortgage Rate Updates and More

After spending over 16 years in the mortgage lending industry I have identified seven myths that consumers commonly hold regarding their credit score.  Over the course of the next few weeks I am going to breakdown each myth and help you better understand how your credit scores are determined so that you can achieve a better outcome for your next loan application.

The fourth myth is that a person’s job and level of income contribute to their credit score.  This is not true.  A person’s job and/ or income are not data points included in the algorithm that determines a credit score.  Certainly higher incomes allow households to better afford their payments and make it less likely they would incur adverse events.  But, at the end of the day a person’s credit score is entirely based on their previous credit behavior.

As THIS ARTILCE points out the information that contributes to a person’s credit score are……

  • How length of a person’s credit history
  • If they have repaid their loans as agreed
  • If they have any missed payments which were 30+ days delinquent
  • How they are currently using debt (is the overall level of debt increasing, decreasing, or remaining stable?)
  • The mix of different types of credit accounts
  • If they have any past derogatory events like bankruptcies, foreclosures, short sales, judgements, or collections.
  • If they have recently made other credit inquiries

Please contact me today to learn more about your home loan options.

How long does a pre-approval last for?

Posted on by Evan in General Mortgage Info.

 

Video Transcript:

Hey guys, Evan Swanson here, Swanson Home Loans, a division of Cherry Creek Mortgage. I’m trying to pack it all into a day, so I’m on my commute home recording the weekly video. This week I wanted to answer the question that we get a lot, which is how long is a pre-approval good for?

WHEN:

Oftentimes, prospective home buyers are trying to figure out the best time to get pre-approved. First off let me say, I think it makes sense to get pre-approved early and often. This way, if we discover issues that are unknown to an applicant, we can try and fix them before they’ve actually found the house they love and want to make an offer on.

FREQUENCY:

Now, to answer the question, typically pre-approvals are good for either 90 or 120 days. And the reason for this is that’s how long the credit report is good for. Credit reports, depending on the type of loan program, will expire after 90 or 120 days, in which case we have to update that.

NOTE:

That said, keep in mind all the information on a loan application is subject to re-verification by the underwriter. It’s not like if an applicant applied today with a job and got laid off a month from now, we wouldn’t be able to simply rely on the job they applied for, we do have to re-verify that they currently work in the job before closing.

CONCLUSION:

Bottom line, pre-approvals are good for 90 or 120 days. I think it makes sense to get pre-approved as early on in the process as possible.

If you’re curious about your circumstances, or what makes sense to you, please contact me today, I’d love to be your resource. Thank you!

FHA follows suit on tightening underwriting guidelines

Posted on by Evan in For Professionals, General Mortgage Info., Mortgage Qualification

A few weeks ago I blogged about tighter underwriting guidelines pertaining to conventional loans for home-buyers who are seeking to close on a new home prior to selling their existing home.

Today we got notification from HUD indicating that FHA loans would also adopt similar guidelines (click this link to view the announcement for yourself).

Essentially, the new guidelines make it harder for home-buyers who have yet to sell their existing home to take out a new mortgage to buy a new home.

What does this mean for home-buyers?

It means that home-buyers who want to buy a new home without selling their existing home either must show enough income to reasonably afford both mortgage payments or plan on selling their existing home before or concurrently with their existing home.

Are there any exceptions?

Yes, if a home-buyer is being relocated for their job and can provide a legitimate rental contract they may use rental income to offset the mortgage payment on the existing home.

Or, if the home that is being vacated has a loan that is no more than 75% of the value of that home then the home-buyer may also use a legitimate source of rental income.