Mortgages with Terry Hastings
Step one is to know your credit score. An easy way to find that is to go to www.myFICO.com
Because you’re a consumer pulling your own report, it won’t hurt your score. If a bank pulls your score, it does ding your credit. The more someone checks it, the lower your score will go because it looks like you’re trying to get a loan.
Credit score is affected by a number of things. Maybe you’ve missed payments, or you don’t have a lot of “credit” because you only use one card. Sometimes even missing a utility payment like cable can affect it. You might be attached to your ex’s credit and if (s)he misses a payment, it affects you. Start by making sure the creditors on the account are yours. If not, scrub your credit and clean things up. You can hire a credit counselor to help you.
One trick to building quick credit history is to piggy-back on another person. For example, maybe your mother has great credit (make sure before you link to her!); ask her if she will add you to her card as an “authorized user” or “co-buyer”; then her credit history becomes part of yours. Presto! Another trick is to use less than 25% of the credit limit. So, if a card has a $10,000 limit, keep your spending balance to $2,500 within each payment cycle.
When can you apply for a loan? Keep in mind that as soon as you file for divorce, you are “party to a lawsuit”; you need to disclose that on a loan application. You must have a formal separation agreement or a divorce decree to qualify for a loan. Lenders don’t like flux.
You can get money from a mortgage broker, a bank directly, or a mortgage banker. When you see the word “banker” it means they funded the loan. A Broker is a middle man who can offer you multiple banks which will give you more options within one source.
Before you realtor-up, you want to show that you’re pre-qualified. This is different from getting a pre-approval letter online; those are only as good as the information you loaded. You’re better off getting qualified by a licensed mortgage loan officer so you know your true spending limit.
General guidelines allow you to use 43% of your monthly income. So, if you make $120,000/year, or $10,000 monthly, you can use $4300 toward mortgage (that’s principal, interest, taxes, insurance, and any monthly debt like a car payment or school loan that appears on your credit report). Alimony can also be used as income, but banks will look for 6 months of payments from day of divorce, and at least 3 years into the future. You may also be able to qualify on assets like dividends, or trust income.
The product you pick should be based on your plans. If you’re only going to make a 5-yuear purchase, you can get a more aggressive rate. If you don’t know, it’s more conservative to do a 30-year fixed, so rates won’t adjust over time.
And of course, there are always rentals, which keep your options wide open until you sort it all out.