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FREQUENTLY ASKED QUESTIONS (FAQs) - Home Mortgages Mexico

How does the loan process work?

Each loan program has what are called “Guidelines”. These are the determining factors relative to a borrower qualifying or not for a particular program. Mortgages are based on loan programs. For example, here's a story that illustrates what can happen:

Borrower Bill has been on his job for 15 years and makes $50,000 per year. He is paying college tuition for his son, co-signed on a car loan for his daughter and sadly his wife had some medical problems and all the bills were not paid by the insurance as they should have been. Borrower Bill has always paid his bills on time and has been fighting the insurance company for months to get them to pay.

Borrower Bill needs a new home loan for some debt relief. He believes he has impeccable credit scores as he has faithfully paid his bills. He calls Mortgage Broker X and requests the interest rate he saw in Sunday’s paper.

Here’s the process - Broker X believes him and then informs him that the rate in Sunday’s paper is no longer available because it’s Wednesday and the rate has increased .25% since last week, but it’s still a great rate and he can lock him in right away. Borrower Bill is a upset but agrees the slight increase won’t matter much. So Broker X obtains minimal information over the phone and locks in the rate with his best lender.

Broker X gives the information, which is Borrower Bill's name, SS#, address and his wife’s name and SS# to his processor along with the rate lock confirmation. The processor sends an application package to Borrower Bill and requests a laundry list of items to be returned. The processor receives the papers back, but 2 weeks have passed. She processes the loan information and pulls Borrower Bill’s credit report, opens escrow and requests an appraisal.

Now, Borrower Bill does not have the credit scores he claimed to have as his daughter was late twice on the car payment. The medical bills outstanding from his wife’s illness have been turned over to collections. (Even though he has insurance, the hospital and doctors only allow a certain amount of time for the insurance to pay before sending them to collections. You are still responsible for the debt and they don’t care if you are having a problem with your HMO).

In an attempt to keep up with his son’s college expenses, he has run up the limit on his credit cards. His credit scores do not qualify him for the loan Broker X locked the rate on. His debt to income ratio is more than 50% which knocks him out of numerous loan programs and two weeks have passed. Borrower Bill is now angry with Broker X, and he should be. Broker X quoted him a rate and program without determining if he qualified for it.

Broker X is a loan originator - a salesman of loans. He usually doesn’t have a lot knowledge of guidelines and programs and relies heavily on his processor to close the loans for him. This is why the second call you receive from a broker is most likely the processor, she is stuck calling the client with bad news.

So what happens to Borrower Bill?

Well, he is discarded as Broker X does very little sub-prime lending. He likes the fast and simple good credit A paper deals. Borrower Bill has wasted 2 weeks and has to start again with another broker. His credit is pulled again and in order to transfer the appraisal to the new lender it will cost him about $125 for the appraiser to change the name of the loan broker.

CREDIT ISSUES

Why does shopping to various lenders lower my credit score?

Each time your credit report is run it can lower your score by 3 points. Therefore, if you shop your loan to numerous lenders, banks or brokers they all pull your credit. Each time your score goes down. HomeLoans4Mexico.com pulls your credit report once and determines the best loan and rate that meets your needs, thus protecting your credit rating.

What determines a credit score?

There are numerous factors ranging from past payment history, collection accounts, time at present address, credit limits, etc. These items are determined by a scoring factor. There are three primary credit reporting bureaus: Equifax, TransUnion and Experian. Creditors, such as your credit card companies, car loan, department stores, etc. report your payment history to one, two or all three of these reporting bureaus. Sometimes a creditor will only view one report, however, most home loans are based on the middle score of all three. The score most often varies between these agencies.

If my score is low can I increase the number?

Yes, credit scores can be increased and the method is based upon the reason for low scoring. In most cases there is misinformation on the report which I can have removed for you. Sometimes it’s a past due bill that was paid but not removed from collections, again these issues can be remedied fairly quickly. I have numerous loan programs available for clients with low scores. A good mortgage history in itself will raise credit scores and gives the borrower time to correct other derogatory issues on their credit.

How does my credit score effect my home loan?

Home loans are predominately credit score based. The lower the score, the higher the risk to the lender and the higher the interest rate. There are rewards to those with high credit scores (720 ) in the way of more loan programs to choose from and lower rates. This is not to say that a borrower with low scores (500 to 625) can’t get a home loan. We do have programs to offer borrowers with credit problems. The rate is often higher on a 30 year fixed, but we have some wonderful credit repair programs which allows the borrower to keep their payments low until they have a chance to increase their scores and qualify for a better program. We also have equity based programs which are not credit score driven.

What can I do to protect my credit scores?

The obvious is to, of course, pay your bills on time. I understand that often people get short on cash and rely on their credit cards to get them through for a month or so. Try not to have more than three major credit cards, two merchant accounts and one car loan. Keep balances in reason and pay more than the minimum payment each month so the balances decrease. Once we have reviewed your credit report we will send you a copy so we can review each item for accuracy and we will help you dispute erroneous items and help you increase your scores. This often takes several months and continues after your home loan is complete. Patience is a big factor, but having good credit is very important in today’s business arena.

So why is HomeLoans4Mexico.com different?

You will not see rates on our web site, nor will we will quote you a rate over the phone before obtaining substantial information in order to guarantee that rate. If the rates have risen but are fluctuating, we don’t jump in to lock the rate. We will float the rate and lock at the lowest point.

We have a great support staff knowledgeable in both California and Mexico lending.

HomeLoans4Mexico.com does not list or sell real estate as a "realtor" in Mexico or in the USA.. Our focus is on financing and assisting buyers through the process of home purchase. We works with the realtor to make the closing as smooth as possible.

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