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porschegal
May 16, 2009 12:26 PM
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Also, don't close any credit cards. You'll need all the credit you currently have, along with its history.


On any card/cards you do have, charge nominal amounts and pay them off immediately. It'll demonstrate responsible use of credit.


Finally - don't quit your job. Length of time at an employer matters when obtaining a loan.


These were all told to me last year when I purchased my first home and seemed to be right on.

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italianscallion33
May 16, 2009 2:22 PM
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@porschegal: Actually, having zero balance on all your cards is not good either. So I've heard from many sources, anyway.

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Skankingmike
May 16, 2009 12:55 PM
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So far I haven't had any issues with my Mortgage guy.


He sat us down and went over our financials and told us what everything will cost including est. utilities.


We went through 3 mortgage guys until we found somebody we were comfortable with.


BTW Rates are pretty much 5% right now for FHA loans even if your score is near perfect you're not getting lower (unless the rate goes down).


I think another thing you should have is find the right mortgage guy these are the people who will decide your future for the next however many years. You can always refinance but I doubt you'll find a lower APR in the near future.


I should be getting the house appraised sometime this coming work (order placed on Monday) and hopefully we get that huge book soon to fill out and sign my life away.

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Verucalise (Est.February2008)
May 16, 2009 2:53 PM
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@Skankingmike: We were locked into a 5.125%/30 year mortgage in November 2007- we took advantage of a state mortgage program (for those interested in NY, it's called SONYMA)


The deals are to be had if you are looking!

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thetango
May 16, 2009 12:55 PM
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Are these rules valid when applying for a refinance?

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Traveshamockery
May 16, 2009 3:54 PM
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@thetango: Yes. You want your credit score to look as good as possible to get the best rate.

One thing to remember though, is that your old mortgage will hang around on your credit score for a few months after the new mortgage starts, so if you're planning on buying a car or something else that uses credit, your debt load will appear higher for a few months after the refi.

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LegoMan322
May 16, 2009 2:42 PM
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@thetango: They are great rules to use for almost any huge purchase.

Although the house is yours, refinancing is buying the home again. I would stick to them.

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italianscallion33
May 16, 2009 2:23 PM
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@thetango: They apply for any sort of situation where your credit will be examined.

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Wombatish
May 16, 2009 12:58 PM
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-ESPECIALLY- do not do -any- of these while your new home purchase is in escrow, just waiting to close.

Seems like common sense, but you'd be surprised at how many people go buy a new car for the new driveway before the house has actually closed.

It can cancel the whole deal, since you've now changed your credit from when the mortgage company approved it, even if it didn't really mess with your score.

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pete
May 16, 2009 5:35 PM
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@Wombatish: All so true - this happened to somebody and it worked out to my benefit.
The people who were going to buy the house I live in now went out and bought a Range Rover while the house was in escrow. The bank wound up pulling the loan the day before their closing.
I swooped in and got the house for 20% under asking.
Bad for them, great for me.

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theysaidwhat
May 16, 2009 3:33 PM
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@Wombatish: I bought a car between the sale agreement and the closing and didn't have any problems. Nothing about my closing changed. I'm curious why it makes a difference for some people and not for others?

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Wombatish
May 16, 2009 11:56 PM
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@theysaidwhat: You probably either a. got lucky and it just didn't matter for whatever reason, or b. Your bank/title company are not the best and somehow didn't find out/bother to check.

It's the title company's job to ensure a clean title, and if the parties start changing things that could affect the title, they will usually go with \"Better safe than sorry\" and cancel the closing until they can get it all sorted out, even if they end up just starting the process over again after it is all sorted out.

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theysaidwhat
May 17, 2009 12:08 PM
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@Wombatish: Thanks! I think I may have been OK because I had no other debt at the time, as my prior house had already been sold, and the fairly small loan I had for the car didn't mess me up. It was a few years ago, so I can't recall if I had told the mortgage company (who also owned the title company) that I was planning to buy it.

I understand your reasoning though. Taking on new debt/credit could influence a mortgage.

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wellfleet
May 16, 2009 2:54 PM
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@Wombatish: I can completely vouch for this. We had two couples, about two weeks apart, who were about to close on their home and came and spent several thousands on new appliances and home theater equipment. A few days later, they returned everything because the new credit card they opened messed up their closing. Now I ask everyone, just in case.

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Cap
May 16, 2009 1:19 PM
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Wombatish is pretty spot on about making sure purchase is closed before you take on new debt. Wouldn't want any last mintue funky surprises to f' up the close.

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rpm773
May 16, 2009 1:25 PM
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A few years ago, our home purchase was in escrow when, upon attempting to open a DirecTv account, they let drop that someone had opened an account in my name and had run up a $1600 balance. I had to go through the whole ID theft routine in order to get it cleaned up.

Id didn't affect our loan or the purchase, but I still wasn't too pleased with DirecTv. And as such I never established service with them.

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TCama
May 16, 2009 1:43 PM
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What time period are we talking about on these things? Like, don't do these things for six months? A year? Two years?

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DreadPirate
May 16, 2009 2:36 PM
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@TCama: TCama - Mainly just until the purchase is complete. I am a week away from closing on my house, and then I will need to open up a new line of credit to get a fridge, washer, and dryer. Both my realtor and my mortgage agent have been clear that any purchases like that should wait until after the closing date of the house to avoid threatening the mortgage.

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jdsmn
May 16, 2009 3:20 PM
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@DreadPirate: I think TCama was asking what I was wondering: I'm not immediately purchasing a house, but would like to in a couple of years. Is it important to not open any new credit lines now, or is this more important if I was closer to purchasing a house?

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Stephmo
May 16, 2009 3:39 PM
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@jdsmn: When you start seriously looking for a home, the first thing you should do is get a preapproval through a lender. You'll know a lot at this point - what you can really afford, what kind of closing costs you'll look at, and what rate you'll paying. Best of all, when you make offers on homes, you'll have a leg up because you have financing arranged (and you'll know how quickly your lender can close). You'd be surprised how many individuals think this is optional.

At this point, all of these rules are in effect. You are a cash-only consumer. Because the preapproval is just that - a preapproval. Your lender will run everything again just before you close - if anything freakish pops up, there goes your financing.

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Andrew Brooks
May 16, 2009 3:56 PM
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I have to watch where I shop? That's ridiculous. If that's how the system works, I'll pay cash at the bottom. Or rent and buy chinese stocks. who cares? I am sick of these agencies, they didn't help prevent the bubble with liars loans, they're not helping decent homebuyers now.

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ChicagoKev
May 16, 2009 11:42 PM
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@Andrew Brooks: The \"watch where you shop\" statement is about credit card issuers dropping your available credit based on where you use the card, not related to the credit agencies directly.

Equifax doesn't know you used your AMEX at Wal-Mart, but AMEX does, and might decide to cut your credit limit from $30K to $300 because they figure you've suddenly started to shop down-market and that makes you more of a risk to AMEX.

And when AMEX lowers your available credit, that does get reported to the agencies -- but not why.

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fredmertz
May 16, 2009 4:42 PM
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As far as that library tip -- if an entity never has your social security number, can they impact your credit score? My understanding was that they can not and that late fees from a library could be sent to collection, but can not appear on your credit report as they never extended you credit.

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SoFlaSnowMan
May 16, 2009 5:12 PM
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I'm with fredmertz and call BS on the library tip. First of all, a collection agency is not going to handle any debt unless there is a reasonable return on their investment. I don't know what the cutoff is, but it's definitely more than $.50.

More importantly, there is a limited subset of the people to whom one owes money that report information to the credit bureaus. These generally only include credit grantors (credit cards, mortgages, car loans). It generally does NOT include utilities, libraries, municipalities, etc) and (to my knowledge) does not include collection agencies.

One other thing to note: if a lien is filed against your property (e.g. for non-payment of taxes), that WILL impact your credit score.

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foodporncess
May 16, 2009 8:14 PM
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@SoFlaSnowMan: You and Fred can call BS on the library thing all you want, but my $45 fine was reported to a collection agency and while it is paid, it's still on my credit report and there's not a damned thing I can do about it.

My brother also had one when he was closing on his first house a few years ago. All that happened was the bank made him pay it before he could close, but it still affects your credit score.

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mauispiderweb
May 16, 2009 7:31 PM
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@SoFlaSnowMan: In my library system, you have to be over the the limit of $10.00 in fines for at least 90 day before they send you a pre-collection letter. IIRC, after another 30 days of non-payment, then it goes to the collection agency.

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floraposte
May 16, 2009 6:14 PM
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@SoFlaSnowMan: The famous example of a library that uses a collection agency is the Queens [NY] Public Library. [www.nytimes.com]

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Anonymous
May 16, 2009 5:37 PM
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Getting a second credit card before purchasing a home is a good idea if you traditionally only have a single credit card.

If you happen to dispute a charge on your credit card, the credit card companies stop reporting status to the credit bureas. This can sometimes take more than 60 days while the dispute is being investigated.

If your only credit card is under dispute, you have no FICO score... not a bad score, NO score.

Good luck getting a mortgage without a score.

Get a second card and use it to buy any online items. That way, if you put your new card under dispute, you dont loose the long credit history with your primary card.

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Landru
May 16, 2009 11:46 PM
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Life is too short for this. Really. I might feel differently if I were trying to squeeze the last dollar when buying a house I can't really afford, but I'm not going to do that.

I'm a happy renter and I'm likely to buy when the cost of a house is less than my rent - the cost including whatever wonky credit score they assign me. Which looks like it could be in the next six months or year.

People will avoid all these things and the credit card companies will come up with more reasons to lower credit scores.

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Bailen
May 18, 2009 2:22 AM
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What about buying something like a car? I know it will obviously play against what available credit I may have. I am assuming that if the bank was going to give me a 400k loan and I buy a 30k car then they will now only offer me a 370k loan. Or do purchases like a car work differently? What if I finance my car through the dealer rather than on a line of credit or through the bank? Whats the best way to facilitate a needed purchase such as a car (must have as per contract with work), and buying a house both within 6-8 months of each other?

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MooseOfReason
May 16, 2009 11:46 PM
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\"4. What where you shop.\"

Best advice I've gotten all week.

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INsano
May 17, 2009 6:01 PM
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@MooseOfReason: Ah, beat me to it. I guess I'm still trying to decide if it's supposed to be declaratively interrogative or interrogatively declarative.

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Hybriddeathdealer
May 17, 2009 10:28 PM
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Geez... First thing to do is to find the lender's credit score rating. I'm sure you'll find it listed right on their homepage next to their rates and your consumer's rights. Next, find your Real Estate Broker's credit score rating, which of course will be listed in plain view on their homepage. Then of course you'll want to find the State's credit score, where the potential purchase will be taking place, as well as the States where the Lender's home office resides. Oh yes, don't forget, now as part owner of your Lending Institution, you do have the right to borrow money from the company who got your money to stay in business in the first phucking place...
Absolve the bank, then absolve the country. Credit Scores are a sales scam and that's all it is. If you have some money, or can make the payment and your agents want to make the sale, then they'll make it happen. If not, then move on. It's what the market will bear. This credit score crap has to stop. It's all lies and marketing. Oh, and if your loan is changed in any way, ever, then all bets are off, period. America needs a revolution, otherwise enjoy your indentured servitude.

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