
	First Time Home Buyer Newsletter Prepared for Your Subscriber's Full Name		Courtesy of: Your Name Your Company Name Company Phone # Your Website

	How Your Credit Score Affects Your Mortgage Your interest rate, maximum loan to value and mortgage options are all dependent on your credit score.

This article is one of the most important you will read. Your credit score and what is on your credit report all affect your ability to get a mortgage. On a credit report, there are 3 scores, one from each of the 3 credit bureaus. Scores are different because different creditors do not all report to all three bureaus. The middle score is the one that is used. If your middle score is a 680 or over, you are considered "A" credit, and qualify for the lowest rates and greatest number of financing options. You can go "no doc" meaning you don't have to provide any proof of income. You also qualify for mortgage that in many cases do not have a pre-pay penalty. If you are financing no more than 80% of the value of your home, you can get fixed interest rates at the low advertised rates you hear on the radio or see on TV. If your score is at least a 620 or 640, depending on the lender, you will still qualify for up to 100% financing going no-doc, but your rates may be a bit higher. You will still qualify for Option ARM mortgages, which give you 4 payment options each month. You can also get 40 or 50 year term mortgages and interest-only mortgages. In most cases, you will have a 2 year pre-pay penalty, if your state allows it. If your score is below a 600, your options start to be more limited. You are now considered a "sub-prime" borrower, and will most certainly have a pre-pay penalty, and will probably be offered a 2-year ARM instead of a 30-year fixed mortgage. You will still qualify for some Option ARM programs, but only at 80% LTV. If your score is at least a 580, you will still be able to get 100% financing if you go "full doc", meaning you show proof of income for the past 2 years, plus 2 most recent pay stubs and proof of enough money in the bank to cover at least 2 months' worth of principle, interest, taxes and insurance. Your interest rate can be about 1% higher than someone with excellent credit.	If your score is below a 580, you can no longer qualify for 100% financing in most cases. Some mortgage brokers have lenders that will do 100% financing down to a 500 credit score, but these mortgages have expensive Private Mortgage Insurance to deal with, and become very expensive. With PMI, you can pay as much as $330 per month for every $100,000 financed. In general, at a 580, you can only get up to 90 or 95% loan to value, meaning you now need money to put toward your down payment along with closing costs. Your interest rate can be up to 2% higher than what a person with excellent credit will get. If your score is below a 540, you are often limited to just 80% loan to value, meaning you need either 20% down, or you need to have the seller carry a second mortgage for a part of the purchase price. Plus, your interest rate will be as much as 3% higher than someone who has "A" credit. If your score is below a 500, you are limited to asset-based lenders, who don't care about credit. They will lend up to 65% or 70% of the purchase price, and charge up to 13% interest plus 4 points. Clearly this is a very expensive way to buy a home! Along with your credit score, lenders look at what is on the report. Some lenders will accept a borrower who is a day out of a discharged bankruptcy, while others want the bankruptcy to be discharged for a year. Some lenders will look to see that you have not had any foreclosures or notices of default for at least 24 months prior to your mortgage application. If you have excessive charge-offs or collection accounts, that can keep you from getting a mortgage. Some lenders don't want to see anything over $5000 in collections or charge-offs.	If you owe back child support, watch out! All lenders pull your state's court documents to verify that no back support is owed. If so, you won't get a mortgage unless it is paid off. Your current rental history is important with many lenders. They will ask for a VOR, which stands for Verification of Rent. This can either be a form signed from your landlord, or perhaps cancelled checks, if you are buying the place that you are now renting or if your landlord is a relative or even your parents. If you show any 30-day lates, this will drop you a letter grade or two, meaning that for a given credit score, you will have even a higher interest rate, or a lower loan to value, or both. If you are living rent-free, some lenders will look at your trade lines, which are lines of credit, or even the bill-payment history of things like day care, insurance, phone bills, etc... Always work with your mortgage consultant to see what you will need to do to get financed if you are in any of these situations. I hope this gives you an overview of how your credit impacts your ability to get a mortgage. Remember, even if you had a bankruptcy, you can still get a mortgage. The most important thing is to show a clean 12 month rental payment history. If your rental history is shaky, you will pay a premium to get a mortgage. If anything I presented here sounds confusing, please call or email me right away! The next article you will receive will cover the many aspects that affect your interest rate. Thus, you will really learn why you can't just call mortgage companies and ask, "What's your rate?"		About My Services I would like to help you with the task of buying a home. To do this, I am able to do the following for you: Evaluate your credit and rental payment history Advise you on the various types of mortgage programs Resolve any issues on your credit report that can affect your mortgage. Determine the largest mortgage for which you qualify Make sure you have all the required loan documents Provide you with a Good Faith Estimate of closing costs Keep you informed as to changes in mortgage interest rates Determine any seller assist that you may ask from a property seller Co-ordinate all aspects of settlement or escrow, including title search, appraisal, paperwork and other services At Your Company Name, we offer mortgages for most buyers, including ones who are self-employed or who have damaged credit. We have lenders who offer 100% financing meaning no down payment for qualified buyers. We also offer mortgages with start rates as low as 1%, making it easier to get into your home. If you have any questions about how I can help you purchase your home, please call me at Company Phone #.