TVFCU Mortgage Tips & Avoidances
September 3, 2021
Clean up your Credit
Before you even start applying for a mortgage, take a lot of time to review your credit score, spending habits and overall debt. One of the most important things you can do is to make sure your bills are paid on time. You also get a free credit report every 12 months from each credit reporting agency. Look over the reports with a fine-tooth comb and make sure all the information is correct and up to date. Also look for any identity theft issues or suspicious activity which could impact your credit history. Go to www.annualcreditreport.com.
Your Credit Score
You usually want to have a score of 740 or better to get the best credit terms. Below that score may usually require a greater down payment. TVFCU also offers a special in-house loan with a 100% financing and no (PMI) or private mortgage insurance if your credit score is 720 or above
Get Pre-Approved
With our very tight housing market these days in both Tennessee and North Georgia, the reality is many realtors will not even work with you unless you are pre-approved for a loan. A lot of people say the pre-approval process is like a physical exam for your finances. The mortgage doctor will look at everything such as debt-to-income ratio, employment history along with assets and liabilities. Of course the heart of it all is that all important credit score. Once you are pre-approved, that process is good for 60 days.
Additional Costs
You also want to make sure you have some savings as well in case a down payment is needed or there are large closing costs. Remember that closing costs may consist of the lender and other third party fees. Always ask. These important decisions you have to make are a lot easier to handle when you use a licensed real estate agent.
What about a large Down Payment?
While some mortgage experts recommend a large down payment when buying a home, others say you should finance as much of the purchase as possible. The right answer depends of your situation. Ask your Mortgage Originator all of your concerns especially when it deals with mortgage insurance and mortgage payments. Your debt-to-income ratio may also play an important factor in determining your down payment. Also, ask your Mortgage Originator any questions you may have about your credit and your spouse’s credit. This is very important when it comes to the name or names on the deed.
Self Employed and a Getting a Mortgage
Congratulations if you are an entrepreneur and self-employed. When it comes to applying for a mortgage, there are really no special hoops you have to crawl through to get a loan and the house of your dreams. Just make sure you do an excellent job documenting your income. Your tax returns will be closely examined. Most mortgage lenders do require at least two years of steady self-employment before you can qualify for a home loan.
How long does the Mortgage Process Take?
It seems everyone these days wants to either buy, sell or refinance their homes. Needless to say, mortgage departments are overwhelmed with requests. Those in the real estate appraisal industry are also working nonstop to get everyone taken care of in a timely basis. Speaking of time, TVFCU’s Mortgage Originators will tell you it takes about 30 to 45 days from when your loan begins processing. Make sure you put aside at least an hour or so to sign the final paperwork at your closing. Don’t forget the process also includes the use of title companies that are also in the mix and their availability as well.
Where is My Money?
You will not receive your funds for a refinancing or a home equity line of credit until three to five days after closing. The Truth in Lending Act requires your lender to give you three business days after closing to cancel the refinance. It is very important that you convey this to whomever you are needing to pay. It could be a contractor, credit card company or family member that is expecting the pay-off. No your dates for a closing and convey these terms immediately.
View our Mortgage Tips and Avoidances video from our TVFCU Virtual Mortgage Seminar series to learn more.
Start the mortgage prequalification process here.