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Monday, January 28, 2013

Don't cover it over - clean it up...

I’m starting to see more and more people who were displaced from their homes 3-4 years ago coming back into the market as potential home buyers. Most of them have been renting and rebuilding their credit, so a recent post by George Souto, a Connecticut Mortgage Broker seemed appropriate to reference today. George wrote in answer to a question about whether judgments, liens, collection and charge-offs need to be settled before one can buy a house again. See his article by clicking on the lionk below.

From within that post you can also read what George wrote about FHA changes to their lending practices. The long and short of it is that FHA and everyone else had tightened up significantly in their lending and now require a much better and much cleaner credit record to get a new mortgage. All the bad practices that led up to the real estate bubble burst have been abandoned. That means that there are lots of people who could have gotten a mortgage in “the good ol’ days” who don’t qualify for anything now.

It also means that you need to take a good hard look at your situation concerning anything that might be a vestige of your past mortgage and financial problems. You can’t just say that you’re still contesting some old judgment or charge or collection effort, you have to clear that up. You should definitely pull your free credit report from all three major credit reporting services and see what they still have on file and what they will be reporting to mortgage lenders. Blemishes there are like pimples on a bride’s face and must be erased before the mortgage lender will say “I do.”

My advice is to get with a good, reputable mortgage loan officer and have them look at your credit in enough depth to give you a pre-approval letter. That still isn’t as thorough as an underwriter might be later, but you’ll get good feedback and good advice on what you need to do to fix whatever they find is currently wrong with your credit picture.  Without a good pre-approval letter in hand it is just a waste of time to go out looking and without getting any issues cleared up ahead of your file going to underwriting, it’s a wasted effort to make offers. Call me for advice on a good mortgage loan officer to see.


Norm Werner is a Realtor® in Milford, Michigan working out of the Real Estate One office in Milford. For real estate, whether you're a buyer or seller; when you need help, Norm's your feller.

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