True.  According to credit experts it can cost you points each time a company pulls your credit report.   You can recover these lost points in a matter of months when certain conditions are meet.  However, this was not the most distributing news.

Lets say your credit score is around 620 and the Bank is not that happy about making mortgage loans to customers who don't have "A+" Credit Scores.  You and your spouse have a  $10K per month income and feel more then comfortable with purchasing a home.  So you call your local Mortgage Broker to help you find a reasonable mortgage loan using "stated docs"  that you can refinance in 2 to 3 years if not sooner. (Your local Mortgage Broker has access to over 300 different Lenders throughout the US and "state docs" means that you state your income, assets and monthly liabilities with a minimum amount of documentation to secure a loan)

Unfortunately, most Mortgage Brokers will pull a "mortgage credit report"  this report will include all three of the major credit reporting agencies.  PROBLEM.  The credit reporting agencies sell the information that XYZ company pulled your credit for a mortgage loan AND a chain of re-actions begin.  (Not to mention that your credit score goes down 3 to 22 points)

Solution:  Have your Mortgage Loan Officer Pre-Qualify or Pre-Approve you.   He/She can then tell you exactly what you need to do and how long it will take, based on your income, debt and credit scores, before you can qualify for a Home Loan.  He/she will also help you determine how much of a Home Loan you can qualify for!  As for the 3 to 22 point decrease in your credit score, it cannot be avoided unless you pull your own Mortgage Credit Scores.  And of course this would only be good for a pre-qualification. 

You must remember that pre-qualifying is not the Lender saying "yes" to your loan - It is your Loan Officer underwriting your loan and analyzing the facts based upon past experience and qualification instructions from dozens and dozens of Lenders and "preparing" your loan package for the Lender.  This saves the buyer time and money if the loan were not to be approved.  It cost money to open up escrow.

Because hi-tech has enter the picture - Mortgage Brokers can compare 3 to 4 loans for a client and determine which loan would serve the client's long or short term goals.  A fix 30 year is not always the answer, especially in the San Francisco Bay Area where housing cost has gone up and over the hill. There are interest only loans to help first time home buyers get started and a variety of other loans to help individuals and families purchase their first home.  In Oakland, California, they  have a program where they will provide first time home buyers with $50,000 down payment  assistance as long as you purchase your home in Oakland.  (The new water front condo neighborhood is well worth taking a look at and is about one half the price of San Francisco's water front condos, and has twice the square footage)  (This article was written in August of 2006)

 

 

Article written by Cassandra Ingraham, Home Loan specialist for http://www.taxeswilltravel.com