Generally, when credit is discussed in school, the instructor talks about the 5 C’s of credit.  Character, capacity, etc.  In terms of mortgage lending there are several key items that you need to obtain a low interest rate on your mortgage loan.  You need a loan officer who is experienced with first time homebuyers, competitive, knowledgeable about programs and products, communicative and looking for a long-term relationship. 

Specifically, you as an ideal buyer has excellent credit scores (middle score of above 720); enough cash for down payment, closing costs as well as reserves.  A steady job with a very good income and little debt.  If you fit into this category, you are ready to get pre-approved. 

 If you don’t fit into this category, you need a plan.   

• Get your scores.  To begin with potential buyers should apply with a mortgage broker and have a mortgage credit report pulled from the 3 top repositories which Fannie and Freddie use.
   
• Lenders require a two-year work history and a two-year history of where you lived so have that information available.
   
• Get your last two W2’s out and your most recent pay stubs and continue to save these items.
   
• Finally, how much cash do you have available for down payment?  Is it in an account that can be verified? Have your complete bank statements available.        

Start thinking about closing costs, which average about 3% of your sales price, as well as having at least two months reserves of PITI (your new mortgage payment) in a bank account.   Think of your cash as a percentage of whatever sales price you are targeting.  Do you have zero, 3%, 5% or 20%?

 The amount available for down payment will determine what products/programs will be available to you.  If you do not have any cash available, discuss with your mortgage broker other options, which may be available to you such as a gift, borrowing from your 401K, etc.

The point of this article is not to discourage the potential buyer but to encourage you to be prepared and then get in the game.  It is my personal belief that home ownership improves everything.  There are some instances where renting is appropriate but owning is usually better.  In our market you need to be prepared to think and act quickly.  Develop a mutual relationship with your mortgage broker:  you send them referrals; they help you and your friends obtain the financing that fits your individual needs.  It’s a Win/Win for everyone. 

Colleen Sargent Your Lender for Life
F & M Mortgage Corp    
9102 Silver Pointe Way
Fairfax Station, VA  22039  
(703) 690-4114/ (703) 690-7274 Fax
www.YourLender-ForLife.com

And Oh By The Way, . . . if you know of anyone who is thinking about buying a home, getting a bridge loan, refinancing or getting a home equity line of credit, please call me with their name and number and I would be happy to follow up with them.  We deeply appreciate and value your referrals. 

First Time Buyer?  Looking for information on how to buy a home? Click Here for more information on how to get started.