Mortgage Credit

Written by Chris Uhl
The information contained herein is only to inform the public and does not create an attorney client relationship with the reader. You should always consult an attorney when seeking legal advice.

Just the fancy print or the words make you want to cringe and run the other way. You know how much effort and work will be involved in moving. When do I pack? When do I call the mover? How do I time the move out of my current residence with the move into my next residence? Most people know the frustration with this part of the deal, but how about the legal and financial part. Don’t you already have enough headaches without the lawyer, banker and real estate agent adding to your problems?

How do I purchase my next residence? Well it is easier to buy and close on your next home than to pack and move. The process is very easy and can be narrowed to a few steps that occur time and again on every real estate sale. This is America and what do you think is the most important part of the deal? The Money!

The very first thing you do is to request a copy of your credit report from the three credit reporting agencies. At one time there were numerous reporting agencies but attrition and economics has narrowed this to three. Experian and Trans Union are the usual reporters in this geographic area. Prior to computers the credit reports were always incorrect. Today, most of your credit report will be correct but there may be a few errors. These errors will effect your ability to get a mortgage. It takes about three months to clear up your report. The errors may again appear on your report, since all this information is exchanged electronically with the credit reporters and amongst the credit reporting agencies, so keep your documentation.

How do I clear up the errors on my report? After reading your report and circling all the errors, you fill out the Consumer Dispute Form or Investigation Form for each error. Mail this back to the reporting agency and they are required by law to physically investigate the discrepancy. If there is no response from the credit grantor then the reporting agency should delete or correct your credit report. Whether or not the credit reporter goes that extra step to look up your old records, believe it or not depend on how humane you treated the credit reporter when you were dealing with them.

The credit reporter can also report your account again as given or report it as current and paid on time. This is where you need to do your homework to clear up your report. If you know you have a problem, call that credit grantor listed on your report before you send the dispute form and see if you can clear up the problem by agreement. Get the creditor as part of the agreement, to report your account as current with all payments made on time and send you a written confirmation. Most credit grantors will oblige because they are aware of what effect credit reports can have on an individual.

If the credit grantor reports that your account is past due and not paid on time, then that will again show up on your report and remain there for seven years. Bankruptcies remain for ten years, although sometimes they can be removed at five or six years by mistake. If a bankruptcy is listed on your credit report, it is not advisable to apply for a mortgage in your name. You may need to rely solely on your significant other to apply for the mortgage.

Once your credit or credit report is all clear, the next step is to go to a mortgage broker who will pre-qualify you for a mortgage. The reason you want a broker and not a bank is that their rates will be the least expensive. The banks have rigid rules and have not adapted to the volatile mortgage market. All mortgage brokers sell the mortgages on the open market. You will find that no matter who owns your mortgage, it will eventually be sold on the open market. The current mortgage market will cause this to be the norm rather than the exception. There may be one or two very small local banks remaining, if there is still such a thing, who still keep all there local mortgages, but this is very rare because even the local banks must compete in the banking market to survive. If who owns your mortgage is important to you, then you must seek out that special bank. Remember the rate most likely will be higher and the qualification procedure more difficult.

What does this means to you? Every mortgage must conform to the standard Housing and Urban Development (HUD) Form, whether you are in Alaska or Massachusetts. This makes every mortgage uniform, which allows them to be sold and traded just like dollars. This also requires credit recipients, like you, to be uniform in their credit ratings.

Good luck and happy house hunting!!!

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