In New Jersey’s Real Estate Market, serious buyers know that the home buying process cannot begin in earnest until they are pre-approved, not pre-qualified for a mortgage. Pre-qualification is based upon “stated” numbers regarding monthly revolving debt, income, and other general information. It is a 15 minute conversation with any mortgage broker can produce a mortgage prequalification letter. A pre-approval letter is based on verified facts. In the verification process for a pre-approval, lenders must make inquiries on employment and even check your credit score. The buyer must submit their last two years of tax returns, pay stubs and bank records. The mortgage broker will then review the list of loan products and secure a loan which fits your needs as a buyer. You also may lock in a mortgage rate for 60 days while you shop. Knowing what your financing is going to be will help you relax while shopping and viewing New Jersey Homes for Sale on the real estate market.
Get yout credit report early! No, it won’t affect your credit rating.
Luckily the Fair Credit Reporting Act recognizes mortgage shopping as a permissible and valid reason for a company to access your credit and it will NOT affect your credit rating or score. Mortgage lenders can run a “soft” credit check, sometimes called a “quotation check” to verify your credit worthiness and pre-approve you for a home purchase. It is also interesting to note that multiple lenders can do this (within a 14 day period) without it affecting your credit score, if you want to compare loans. You can also check your own credit report as many times as you would like without causing harm in the same manner. In fact, before meeting with a lender or considering purchasing a New Jersey home, you should evaluate your credit report and make sure it is error free. If corrections are needed , it is best to find out before finding your New Jersey Home. Once going under contract you will only have a few days to get your paperwork into the bank , so starting early will ensure you are ready and have no surprises.
Not meeting your mortgage commitment deadline is grounds for the seller to void the home sales contract.
Other types of credit inquiries CAN affect your credit report, so refrain from opening lines of credit at clothing, furnishing stores or car dealerships and other installment retailers until your loan is funded. Credit inquiries account for less than 10% of your overall credit score, but it is still not worth the risk when purchasing a home is in your near future. To keep yourself credit-worthy, make your payments on time, continually strive to increase your income, and make sure the monthly amount accessed on each of your credit cards is less than 30%. These proactive measures will go a long way to helping you secure the loan you need and the home you want.