Charlotte NC Real Estate - Your Charlotte Real Estate Agent Rick Waite
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Rick Waite

How to help qualify for a mortgage


Trying to buy a new home and need a little help obtaining a Charlotte mortgage? This page is intended to help you improve your less than perfect credit.  There are many very basic financial tips that can help you improve your credit.  I do not know why this is not taught but much I have learned over the years.

Loan Programs: Since the 100% financial markets collapsed many buyers are seeking other options.  One of the more popular programs are FHA loans.  An FHA loan requires a 3.5% down payment.  The closing costs on an FHA loan are a bit higher than a conventional mortgage but is one of the best deals for many buyers since it requires a minimal down payment.

There is also a little known program called USDA loans.  USDA loans actually pay 100% financing and will actually finance closing costs into the loan.  The catch for USDA loans are that they are created to help rural development.  There is a USDA website to type the address to see if the home qualifies for the USDA Mortgage.

1)  Credit Cards:  When a credit company checks you credit score, one of the Calculatoritems considered is the ratio of revolving credit on each credit card (credit limit) compared to you balance.  The credit scores prefer to see a two year credit history.  They also like to see that you use your credit, can manage your money and make payments on time. 

2)  Credit Card balances:  Credit Bureaus like to see that you use the card and make regular payments.  It actually helps your credit if you do not pay off your entire bill every month.  Always keep you balance below 50% of the limit.  It is actually best is you maintain a balance below 30% of your limit on each card.  If 30% of your credit limit is exceeded, call to increase your limit.  This rule applies to every credit card individually.  It does not matter if you have $1,000,000 of open credit limit.  If you have one card above 50%, it hurts your score.

3)  Capital One Credit Cards:  Cancel this card immediately!  Every month your credit cards reports your open lines of credit (active accounts).  Each card reports you credit limit and the balance!  As a standard practice, Capital One does not report your balance.  As the various Credit Bureaus check your credit, they can not tell where you are with respects to your limit.  The Bureaus assume the worst and will reduce your credit score.  I have had various Mortgage Brokers share that by canceling these cards alone, your credit score will jump between 15 and 25 points.

4)   Late payments:  Do not ever have a payment over 30 days late!  I realize real life happens but this is a huge strike against your credit.  Do what ever you can to work out something to protect your credit.

5)  Selecting the "Right" mortgage loan:  The loan with the smallest down payment is now the FHA loan.  This loan has been around for quite a while but due to all of the other programs that were available this loan was seldom used.  The FHA loan only requires 3.5% down payment but does require more time to close the loan and additional steps/expenses added in by the Government (otherwise known as job creation). Other than the FHA Loan, the next possible option is with 10% down payment but even these loans are on a case by case basis.

6)  Closing Costs:  Purchasing a home has many additional costs.  Some are for the inspections and to assure that you are receiving a good title to the home.  Others are lender fees, attorney fees and Government fees.  These fees range from 3 to 5% of the loan value.  Many fees are standard fees.  For example an Attorney may charge $600 for each closing.  The attorney does the same amount of work for a $50,000 home and a $5,000,000 home so the percentage "appears" higher for the $50,000 home.  If you do not have the money for closing costs, then I will request the seller to pay the closing costs when submitting the offer.

I hope this basic information helps in obtaining your new Charlotte house.  I will also build upon this information and share scenarios as they arise.

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