Credit Info
Often clients come to Valley Mortgage Company understanding just a little about the credit review process. It is not uncommon for a person to not know the details of their credit history or have some mistaken impression about their creditworthiness. Some have never seen a proper credit report. Yet credit is a key component to the mortgage process.
CREDIT SCORING
​
Credit analysis can come in many forms, but the report most relevant to mortgage financing is the triple merged-triple scored credit report. Credit bureaus across the country produce reports by collating information about your credit history typically from the three principle national credit repositories namely, TRANSUNION, EQUIFAX and EXPERIAN. When you establish a line of credit, the creditor may report your charging and payment history with one or all of these repositories. In turn each repository has developed its own credit scoring system which results in an actual numerical score included on your report. Since each repository uses a different formula for scoring and since each repository may collect different creditor information is it common that your report will contain three different albeit similar scores. The credit scoring system became prevalent during the 1980's as a way for lenders to quickly evaluate a potential borrower's creditworthiness. Lenders today heavily rely on these scoring systems to predict financial risk over time. A score in the low or mid 600 range typically meets the minimum requirements set forth by lender. The basic credit scoring formula takes into account several factors including the following:
-
Payment history - A good record of on-time payments enhances your credit score.
-
Outstanding debt - Balances above 50 percent of your credit limits work against your credit score while balances under 30 percent are considered desirable.
-
Credit account history - An established credit history is key. Having too few or too many trade accounts works against an ideal profile.
-
Recent inquiries - When a lender or business checks your credit, it causes a hard inquiry and potentially a slight ding to your credit score. Apply for new credit in moderation.
-
Types of credit - A healthy credit profile has a balanced mix of credit accounts and loans.
CORRECTING INACCURACIES
​
It is common for your credit report to contain some inaccuracies. Many times this is not relevant to your score or overall creditworthiness. However, under the Fair Credit Reporting Act, you are protected from having inaccurate information on your credit reports. If you find such an inaccuracy, you must contact both the creditor associated with the mistake as well as the repository recording the improper information. This can be a time consuming and sometimes frustrating process but it is essential for you to maintain a proper credit profile. Many consumers now check their credit history on an annual basis. We can secure your triple merged-triple scored credit report by our completing and returning the CREDIT REPORT REQUEST.
TransUnion
P.O. Box 1000
Chester, PA 19016
800-916-8800
Experian
P.O. Box 2002
Allen, TX 75013
888-397-3742
COMMON MISCONCEPTIONS
-
Conventional Fixed Rate LoansFor the typical borrower Valley Mortgage Company, Inc. has available several conventional fixed rate loan products at the prevailing competitive rates. Terms extend from 10 to 30 years with up to 95% financing for qualified borrowers and up to 97% financing for qualified first-time home buyers.
-
Adjustable Rate LoansAlso available are a variety of variable rate loans including the 5/1, 7/1 and 10/1 convertible and non-convertible ARM's aimed to qualify the borrower with income growth potential. Variable rate loans typically offer the borrower a lower rate initially in place of the fixed rate security, ideal for the borrower who plans to own the property for a shorter term.
-
FHA LoansValley Mortgage originates FHA loans insured by the United States Department of Housing and Urban Development (HUD). For the borrower looking to finance the median priced home as established per county, our lenders offer special government insured loan products. FHA loans are a great option for the qualified borrower who needs maximum financing.
-
RHS Guaranteed LoansRural Housing Services guaranteed loans open the door to home ownership for many who would otherwise not qualify for a conventional mortgage by offering 100% financing of the purchase price, closing costs and prepaids so long as the appraised value permits. This product is the solution for the borrower meeting sliding scale income restrictions with good credit but little money available for a down payment, closing costs or prepaids.
-
Construction LoansTo secure construction money for the customized dream home, Valley Mortgage Company, Inc. can arrange the requisite financing with the appropriate third-party provider.
-
Rehabilitation LoansAvailable on new purchases and refinances, a rehab loan can realize all the potential a home can offer. A property that does not otherwise qualify for financing can become a beautiful home with a conventional rehab. Rehab loans also help the homeowner build an addition, install a new roof or remodel a kitchen.
-
Commercial LoansCommercial financing has it own specific criteria and structure. While some properties that contain both commercial and residential use might fall within the guidelines for mixed use financing, most properties with commercial activity require commercial financing. Typically commercial loans are considered by lenders on a case specific basis. We can analyze your need and advise you accordingly.