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| Financing and Mortgage |
Your guide to financing a home
As a newcomer to the San Antonio region, you may not be new to the home-buying process. Even so, it’s helpful to review all the steps involved, as well as San Antonio-area resources and conditions. Since San Antonio has a relatively healthy real estate market, finding the right type of mortgage for your home should not be difficult. With the proper research and the help of a reliable real estate professional, purchasing your San Antonio home should be a rewarding experience.NAVIGATING THE FINANCING PROCESS
As you prepare to purchase a home and seek financing, it is best to first have a realist view of the all the steps involved. The financing process can take anywhere from 15 to 45 days, but typically runs 30 days. Your agent should be involved throughout the process to help it run smoothly. The basic timeline for what will happen along the way is as follows and is covered more thoroughly within this chapter. For additional expert articles about financing and obtaining a mortgage in San Antonio, visit www.RelocatingToSanAntonio.org.
- You submit the completed 1003 application and any required supporting documentation to the lender.
- The lender orders an appraisal of the property, a credit report and begins verifying your employment and assets.
- The lender provides a good faith estimate of closing and related costs, plus initial Truth in Lending disclosures, which, by federal law, must be provided by your lender within three days of first pulling your credit report.
- The lender evaluates the application and your supporting documents, approves the loan and issues a letter of commitment.
- You sign the closing loan documents and the loan is funded.
- The lender sends its funds to escrow.
- All appropriate documents are recorded at the County Recorder’s Office, the seller is paid, and the title to the home is yours.
HOW IS YOUR CREDIT?
Before you even begin applying for a mortgage loan, you’ll need to evaluate your credit-worthiness. There are three major credit reporting agencies Equifax, Experian and TransUnion in the United States that maintain records of your use of credit.
These records are called credit reports, and lenders will want to check your credit report when you apply for credit. Generally, lenders will also want to know your credit score. A credit score is a number that summarizes your credit risk, based on a snapshot of your credit report at a particular point in time. A credit score helps lenders evaluate your credit report and estimate your credit risk. By reviewing this report a head of time, you can identify any issues that are due to fraudulent activity and work towards correcting them.
NATIONAL CREDIT-REPORTING AGENCIES
Equifax: 800-685-1111, www.equifax.com; Experian: 888-397-3742, www.experian.com; TransUnion: 800-916-8800, www.transunion.com.
Go to www.annualcreditreport.com to request a free copy of your credit report, once a year, or call 877-322-8228. See, also, www.FTC.gov.
FICO SCORES
The most widely used credit scores are FICO® scores, the credit scores created by Fair Isaac Corporation. Lenders can buy FICO® scores from all three major credit reporting agencies. Lenders use FICO® scores to help them make billions of credit decisions every year. Fair Isaac develops FICO® scores based solely on information in consumer credit reports maintained at the credit reporting agencies.
Your credit score influences the credit that’s available to you and the terms (interest rate, etc.) that lenders offer you. It’s a vital part of your credit health. Understanding your FICO® score can help you manage your credit health. By knowing how your credit risk is evaluated, you can take actions that may lower your credit risk – and thus raise your credit score – over time.
— Why You Want a High FICO Score
According to Fair Isaac Corporation, the difference between a FICO® score of 620 and 760 can often be tens of thousands of dollars over the life of your loan. A low score can cost you money each month or even stop you from refinancing at a rate you know other people are getting.
— How Are FICO Scores Calculated?
Different credit data is collected to determine your credit score. This data can be grouped into five categories representing different percentages, reflecting how important each of the categories is in determining your FICO score. The FICO score is based on your credit history and is a compilation of several factors including: your payment history, outstanding credit, length of credit history, types of credit used and new credit you’ve acquired or applied for.
Payment History: The first thing any lender would want to know is whether you have paid past credit accounts on time. This is also one of the most important factors in a FICO score. Your payment history accounts for approximately 35 percent of your FICO score.
Amounts Owed: Number of accounts with balances represents approximately 30 percent of your FICO score. The amount owed on all accounts. Note that even if you pay off your credit cards in full every month, your credit report may show a balance on those cards. The total balance on your last statement is generally the amount that will show in your credit report.
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