Saturday, January 24, 2015

How Credit Inquiries Affect Your Credit

Every time you apply for credit from a lending institution, an inquiry is recorded on your credit report. This is called a hard pull inquiry. A soft pull inquiry is if your credit report is pulled by a non-creditor. Soft pull inquiries do not affect your credit scores; these include: potential employers, non-lenders, or yourself. Each time a credit report is pulled by a lender, it can have a negative impact on your score(s) by as much as 3 to 5 points. Credit inquiries are listed at the end of a credit report and remain on your report for 2 years.

How Do Lenders Interpret Credit Inquiries?

When a lender reviews a credit report and sees numerous recent inquiries, it is an indication that a borrower is applying for credit and being turned down by other lenders. This is a sign of potential financial problems or increased risk to a lender. Multiple recent inquiries are a red flag to potential lenders because they are a sign that recent unreported loans and revolving accounts may have been opened but not yet reported to the credit bureaus. Although, the type of lender pulling your credit will impact how your scores are affected. Mortgage, auto, and student loan inquiries will not impact your scores for 30 days. Also, any inquiries for mortgages, auto loans, or student loans within a 45 day period will only count as one inquiry. The rational for these two exceptions is to allow a consumer to shop for the best interest rate with multiple lenders without being penalized. Just remember, these rules only apply to mortgage, auto, and student loan inquiries. Credit cards, department store cards, gas cards, and personal loan inquiries are each counted against your score(s) immediately.

How to Protect Yourself From Credit Inquiry Abuse

Request a free copy of your credit report from all of the 3 main credit agencies (TransUnion, Experian, and Equifax). Credit reports can be requested online from any of the above mentioned credit agencies or from You are legally entitled to one free credit report yearly from each credit agency.

Thoroughly review the credit report(s) for any errors or inquiries that you did not authorize. Auto dealerships are notorious for sending your credit application for an auto loan to multiple lenders. You may see 10 to 15 inquiries after you apply for an auto loan through a dealership. Although there is no fixed point value per inquiry, depending on the length of your credit history you may see this amount of inquiries lower your scores significantly. You can request the credit bureau correct any errors or dispute any unauthorized inquiries. If the creditor who put the unauthorized credit inquiry cannot provide evidence that you authorized them to pull your credit, it should be removed from your report.

Credit inquiries account for 10% of your credit score(s). So it is imperative that you review your credit, making sure any inquiries listed on your report were authorized by you. Any lender who pulls your credit without your permission is violating federal law.

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Wednesday, January 21, 2015

What to Avoid After Your Mortgage Pre-Approval

Buying a house for the first time can be very exciting. The first and most important step in the home buying process is the mortgage pre-approval. But, many first-time homebuyers have the misconception that once they are pre-approved, they can change their financial situation without the possibility of their approval also changing. A lender issues a pre-approval based on an individual's employment, income, credit, debts, and down payment. If anything changes the individual's financial picture after they receive a pre-approval but prior to closing on a house, the lender has the right to either change the approved amount or deny the loan. Some of the most common pitfalls that cause a loan to be denied after a pre-approval was issued include the following:

Home Inspection - If during the home inspection major repairs are cited, these will likely need to be corrected prior to the loan closing. This is especially true if the pre-approval is based on government financing (FHA, VA, or USDA Loans).

Credit Inquiries- Credit inquiries have a negative impact on your credit score. After you are pre-approved it is important to avoid your credit being pulled by other lenders until you have officially closed on your house. Most lenders will be notified if your credit is pulled prior to closing on your mortgage. You will likely have to provide an explanation letter on why your credit was pulled, and verify if the inquiry resulted in new debt. Credit reports are typically good for 120 days. If your credit report expires, the lender will need to update your credit report. In this instance recent multiple credit inquiries may lower your score and possibly disqualify you for a mortgage.

New Purchases- Your pre-approval is based on a snapshot of your income and debt at the time you applied for the loan. If you purchase anything on credit prior to closing such as: appliances, carpeting, furniture, new car, or any other significant purchase, your debt ratio will change possibly resulting in denial.

Employment- The pre-approval issued to you was based on your income and employment. If you change your employment, your income may change or the income you will now earn in your new job may not be acceptable to the lender. If you accept a new job that has commission, tip income, bonus, or a probationary period the lender may not use your income to qualify you.

Undocumented Funds- All the money needed to close on your mortgage will need to be documented showing the source of funds. Any large deposit in your bank account from the date of your pre-approval to the date you close on your mortgage will need to be documented. Gift funds (if acceptable per loan type) typically will need to be documented with a copy of the gift check, a gift letter, and proof the funds came from the giftor's bank account.

Over-drafts- Most lenders will require a current bank statement within 30 days of closing. If there are any recent over-drafts on your bank account, they will need to be thoroughly explained as a one-time occurrence.

Self-Employment- If you are self-employed, there are many circumstances that may change your financial picture after the pre-approval process. These include expenses written off on your tax return, current profit and loss statement (showing income stability), undisclosed debts, and personal debts being paid through the business. If you are self-employed, be very diligent when you inform your loan officer of your complete financial picture, so there are no surprises when it comes time to close your mortgage.

It is in your best interest to keep your loan officer informed of any major financial changes between the mortgage pre-approval and your loan closing. You should have regular contact with your loan officer to verify if any changes in your financial picture will impact your final mortgage approval and closing.

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Sunday, January 18, 2015

Top 5 Components For A Successful Purchase In The Current Real Estate Market

Buying your dream house can be a fulfilling as well as an overwhelming experience. Without doubt, it is one of the most significant aspects of your life but it can get complicated fast. With so many options, each offering unique attributes, it can become very difficult to select the right property for yourself. Yet, if you are armed with the proper tools - infallible research and a dedicated real estate agent, you can succeed in buying your dream property at a fair price in any location. Here is a detailed guide to help you successfully purchase you dream property in the current Real estate scenario.

What is your affordable range?

Pre determine your affordability range. It will give you a fair idea of how much house you can afford to buy. Apply for a pre-qualification for mortgage. Once you have a fair idea of your affordability range, you can choose to see hoses that are well within that range. This allows you to be more specific and weed out options that are too far out of your range.

Sieving through property listings

Many official websites and real estate dealers will provide you with 24-hour access to property listings. Use this information to make a list of the properties that have the features that you most need and are affordable. You should also check for locations that are conveniently accessible from your office, schools, and various transportation hubs. You can also modify your search parameters and sign up for email lists on newly available properties right on the real estate websites.

Finding the perfect neighbourhood location for your property

To find the right location for your property you have to create a checklist against which you need to compare all the unavailable neighbourhoods. The checklist should consider vital points such as what are your average time requirements for a commute to work. How close do you want your property to school, super markets, or the airport terminals? Are you the type to want a secluded property to maintain privacy or do you want to be right in the middle of the bustle of the city life? You should also check how walk-able is your neighbourhood, especially if you have pets or enjoy a quiet evening walk every day. The best way to judge the neighbourhood is to talk to the residents of the area when you have more or less decided on your choice of property within the neighbourhood.

Choosing the right real estate professional to help you

Using the help of a professional expert will reduce your search time dramatically. Not only will you have a clear idea of a variety of neighbourhoods but you can also get smart tips on how to reduce your overall costing by selecting a property which might not have been on your radar but which aptly satisfies many of the factors you desire in your dream house. A real estate professional will also help you secure appropriate financing and help direct you towards the right plan to help afford the right property.

Finalization of fees and terms

Other than the purchase price of the property, there are a variety of significant fees and terms to be handled before you can move in to lock the transaction of your property. Ask your real-estate professional to help you with critical details such as the building inspection, proper permits, legal transactions and the inspection for electricity and water in the property. You should also check whether the professional is to be paid by the seller or you have to handle the payments.

The author is a well known expert in the field of MLS Calgary real estate. She has expounded a simple guide with appropriate information for new buyers when searching for a property in this area.
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Thursday, January 15, 2015

Five Tips for Buying Real Estate

Purchasing real estate is a fun and exciting time. Whether you're looking for your first home or your fifth, the real estate market is full of a wide variety of homes. From fixer-uppers to new construction, there is something out there for everyone. Before you get started, consider these must-know tips to help make the most of your buying experience.

1. Before you start looking for real estate, be sure to get pre-approved. By getting pre-approved, you'll know for sure that you are looking for homes that you can afford. This way, when the time is right, you will be able to put in a serious offer without having to worry if you can actually afford the house. Remember that pre-approval is different than pre-qualification. Pre-qualification is based on a review of your finances. Pre-approval is approval from the lender that takes into consideration your income, credit history, and debt.

2. Just because you are unable to put a 20 percent down payment on a house does not mean that you cannot purchase a home. You may still qualify for a loan even if you do not have a larger down payment. There are a number of private and public lenders that offer low mortgage rates, along with the opportunity to put a smaller down payment on your purchase.

3. Look for homes in good school districts. This is important even if you do not have children that are school age. Owning a home in a good school district is important when you go to resell your home later down the road. For many homebuyers, purchasing in a good school district is at the top of their priority list. A good school district can easily help to boost the value of your property.

4. Remember, a bigger home does not always mean a better home. Many people automatically assume that bigger is better. Many working in real estate tell you that the largest house in the neighborhood only appeals to a small number of buyers. When thinking long-term, you never want to limit the number of potential buyers when it comes time to re-sell your home. Keep in mind that the value of your home is not going to increase as much if you own the biggest home on the block. Your appreciation is going to be limited if you have a $500,000 house and your neighbors all have $300,000 homes.

5. Opt for the help of a real estate agent before purchasing property. When making a purchase of this size, it is always a good idea to have the help of a professional. While the Internet is a great resource, it cannot take the place of using a professional agent. Look for an agent that you are comfortable with and who has your best interests in mind when helping you look for a new home.

Scituate, MA homebuyers trust Coastal Brokerage for all of their real estate needs. Learn more at
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Monday, January 12, 2015

The Healing Chair - Porter Report

This weeks Porter Report showcases Jim's acrobatic talents as he presents your weekly mortgage update upside down in his new therapeutic chair.

Tuesday, January 6, 2015