3 Ways to Boost Your Credit for a Home Loan

We know credit is important and essential to financing. Lenders place a significant weight on past, present and future credit. What do lenders look for when determining creditworthiness? They take the middle credit score from the three credit bureaus they pull from. It’s the number, lenders use to gauge the 3 C’s:

        Character
  
        Capital
    
        Capacity    

 Breaking these down, it makes financial sense why lenders delve into your
 personal information to better understand their return on investment (ROI).

Character-Defined by the author, Mohamed Ayed, “May your character preach more loudly
than your words”. Lenders are looking at your credit history to
determine your ability to repay and at the likelihood of default. Questions
they are using may include the following:

• Are your payments made on time?
• How many revolving (credit cards, lines of credit) and installment loans (auto, unsecured personal loans) accounts are in your name and how long have payments been made?
• What is the length of employment at your current job?
• Have you lived at the same address for 2 years?
• How long has your credit file been in existence?

How do you boost your character and credit rating? For starters, get a copy
of your annual credit report for FREE. Click here. You can view your past
and current credit history and begin to fix any items lenders may find
character worthy i.e. late payments and high balances on revolving accounts to name a few.

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Capital-Show me the money. The lender reviews assets such as liquid assets: checking, savings,
money market, CD, stocks/bonds and mutual funds. Is there a property that
will secure the loan? The capital reflects the investment you will
contribute to a purchase and contribute to the down payment and closing costs.

 Capacity-Lenders review your current employment and income sources. They
 are looking to verify you can repay the loan and have set a debt-to-income
 ratio factor to determine eligibility. It’s important to understand your
 salary and likelihood of future employment, your current debts and expenses
 and financial accountability.
 

E-book: How to Boost Your Score for a Better Interest Rate

 

What if you need to dispute items on your credit report? All three credit bureaus
have a process of disputing items. Click on each one for the
dispute process, Experian, Equifax, and Transunion.

Talking with a mortgage professional that understands their lender
guidelines, products, and programs can assist you in building and re-building your credit for success and loan approval!

San Diego 203k Renovation Loans: Use Lender Cash to Renovate

San Diego's current housing shortage provides current homeowners and home purchasers the chance to renovate a home with your style and design in mind. 203k FHA Renovation Loans are not for the faint of heart. My advice: Have a plan, find a solid contractor, and set expectations. In addition, work with a loan officer that has either many years in the business or has completed many, many renovation loans. A solid mortgage advisor is not only helpful and will expedite the process, they are worth their weight in gold.

San Diego Renovation Loans: Quick List for 203k Loans

1. Have a Plan: Make a list and separate "needs" from "wants". This will be helpful when hiring a contractor to itemize your priorities. Take inventory of the house yourself and be prepared for the contractor to find things outside your scope. Consider paying for a home inspection. This independent 3rd party will assess all the challenges your home currently faces. A contractor can work off this inspection, saving time and money.

2. Find a Contractor: Contractors are a plenty, however, find one that really understand the needs of the job. Lenders want all I's dotted and T's crossed. Liability insurance and workmen's compensation are required. In some cases, depending on the renovation expenses, they will will be accountable to a 3rd party that will oversee their work. Remember, you're working on the lenders money. Be clear and specific. A contract will be signed prior to commissioning work.

3. Set Expectations: Understand your goals and communicate them to the contractor. Check in and insure they are being met along the way. Open communication and setting expectations up front will save everyone time. Talk to a real estate professional and/or your mortgage consultant on what renovations will add value to the home, i.e. new windows, central heat/air, electrical, etc. This may assist in selecting a "need" over a "want" as it increases your property value and ultimately your equity in the home.

When in doubt. Ask your lender. Making changes to estimates or sub-contractors selected can be a recipe for disaster. Always, always ask your lender first and get it in writing. Communication and written proof that a change has been approved are key to keeping more money towards the project. Take good notes and save receipts and invoices. They can become your lifeline to communicating with all parties. Fix it, don't nix it!