I’m going to share some knowledge that most borrowers don’t have. Without it, mortgage applicants can and will get hurt – badly! Bottom line is this -- you might be covered in red flags -- and not even know it. But your lender will. Oh, yes. They’ve got their ways. That’s why you absolutely need to get a jump on the situation -- well before you shop for a Laguna Beach home or any home. So get together with your real estate agent as soon as possible. And find out how to address the issues covered below. Believe me, a deficiency in any one of these areas can slam the brakes on your loan. Or put you at risk of losing your entire $25,000 security deposit!
SEARCH AND CONQUER
At least thirty, if not sixty days, before you hit the house-hunting trail, enlist a qualified lender to do major reconnaissance. These professionals can scour your documentation for hidden red flags, well before they pop up and make a shambles of your escrow. Under no circumstance should you write an offer UNTIL you resolve all potentially damaging issues.
What is equally important, search far and wide for the very best mortgage rate offered by a lender or a lending institution. Remember, a fraction of a percentage can translate into thousands in savings.
Hillary’s Recommendation: 30-year loan, no points.
WHAT LURKS IN YOUR FICO REPORT?
This one’s from Hillary’s personal vault. The BF (as in Boyfriend) had been noodging and noodging me to snag a copy of my FICO report from myfico.com. “Better have a look before we apply for a home loan,” he counseled. “Not me”, I resisted. “My score’s hitting the ceiling.” But a few noodges later, I relented. And I got the shock of my life. According to Trans Union, I still owned a million dollar Laguna Beach home for which I was paying a monthly mortgage of $5,500. Never mind that I sold said residence back in ‘09. What Trans Union says is gospel truth as far as the bank is concerned. And that lender sure wasn’t going to send me deeper into debt with a mortgage on a ‘second’ home. If I had done my homework as the BF advised (thank you, dearest), I would have caught this glaring mistake well in advance. Now I’ve got my work cut out for me. Remember, this isn’t a one-phone call solution. It takes a good month or two of bureaucratic back-and-forth to clear things up.
A FICO report also uncovers any personal charge card disputes tarnishing your record. Banks don’t give a hoot about the disputed amount. In fact, the sum never is made known. Any beef with creditors is a bright red flag, even if it’s just pennies. End of story. In my BF’s case, the bone of contention was a staggering $17 bucks! And it was the charge card company that said “we will just take it off your account!”
And if you’re concerned about identify theft, FICO offers added insurance by providing a complete picture of your charge history. If some unauthorized fashionista buys a pair of dress shoes in Bangkok, you’ll know it.
Hillary’s Recommendation: Check your FICO twice yearly with a website like myfico.com .
BEWARE…THEY’RE CHECKING THE CHECKING
Are you using a personal checking account to cover your down payment? The bank wants the full story on all money in excess of $5,000 that goes in or out -- ironically more important is what come in. Be prepared to explain exactly what you did with the dough. You’ll also need to provide copies of all checks associated with large sums.
By the way, you can count on perfect timing. Ironically and without fail, the month of your loan application will turn out to be the month you’re smacked by an avalanche of big bills. Popular favorites are car insurance, health insurance, and a fortune in birthday presents for the kids, who coincidentally, have been extra good this year. And if you’re really well-timed, it’ll be Christmas season!
Hillary’s Recommendation: Don’t purchase anything priced higher than $1,500. It’s time to discover Marshall’s and the 99 Cents Store!
ARE YOU QUALIFIED TO RENT OUT YOUR LAGUNA BEACH HOME?
If you’re keeping your existing residence as a rental property, plan on going pro. Fannie Mae and Freddie Mac insist you be an experienced landlord of at least two years. Or maybe you can get a property management company. Also, Fannie and Freddie want landlords to have at least 6 months of liquid mortgage payments in reserve. This ensures the owner won’t bail out and short sell the rental after getting the new loan.
Would you like to learn more about getting the best loan for a Laguna Beach home? Drop a question or two into the comment box.
And be sure to contact the caring professionals at The Coastal Property Experts today to schedule your complimentary consultation. We promise you’ll get what you want in the Laguna Beach real estate market…much sooner than you think.
The Coastal Property Experts
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