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What You Need To Do Before Buying a Home in Raleigh

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Are you thinking of buying a home in Raleigh? Before you dive into the process, it’s important to make sure that you are prepared for the journey. Here are three Martini Mortgage Group key things that you can do to get ready to buy a home in Raleigh or anywhere in the U.S. for that matter.

Prepare Your Credit

Before applying for a mortgage loan, it’s important to make sure your credit is in good shape. Mortgage lenders typically require a good credit history for you to qualify for a mortgage. This means having several credit cards and installment loans with payments made on time for the past two years, as well as making all rent payments on time during that period.

A good credit score will ensure that you have access to better mortgage rates and loan terms. You can look at your free credit report from the 3 major bureaus (Equifax, Experian, and TransUnion) once per year as well as order copies of your credit reports from each bureau through annualcreditreport.com. It’s important to review all of your reports closely and address any discrepancies or errors with the respective bureaus.

For more information about credit, check out: Martini Mortgage Podcast | Episode 167 | Freeze it and opt-out

Prepare Your Cashflow

It’s also important to take a close look at your income and expenses before beginning the process of buying a home in Raleigh.

Make sure that you understand how much money is coming in and going out each month, so that you can begin planning for what kind of house payment you can afford on top of any other existing debts or expenses. Knowing how much money is available for down payments and closing costs will help set realistic expectations about what kind of home you may be able to purchase in Raleigh.

It’s also important to make sure your debt-to-income ratio is not too high. Most lenders require that your total monthly debt payments (including the new mortgage payment) should not exceed 43% of your monthly income. If your debt-to-income ratio is higher than 43%, consider paying down some debts before taking out a new loan or try finding ways to increase your income.

Prepare Your Savings

Mortgage lenders typically require you to have a certain amount of savings in reserve in order to qualify for a mortgage. Your savings should be in your account for at least two months in order to qualify, and any large deposits will need to be explained and documented.

The amount of the required savings will vary based on the loan program that you choose. However, a good goal is to save enough for a 3%-5% down payment, plus 1-3 months of mortgage payment reserves.

For example, if your new mortgage payments will be $3,000 per month, you should probably aim to save approx. $9,000 plus the amount of your down payment.

Start budgeting now so that when it comes time to make an offer on your dream house, you’re prepared financially too!

Martini Mortgage Group Bottom Line

Buying a home can be an exciting experience – but first you need to make sure that you are prepared financially by having good credit history and cashflow situation plus enough savings set aside for closing costs and fees associated with the purchase of the home. By following these three Martini Mortgage Group steps – preparing your credit, cashflow and savings -you will be well on your way towards becoming a homeowner in Raleigh!

If you have questions about buying a home or about securing the proper mortgage, let’s connect so you have expert advice on your side.

Kevin Martini

Kevin Martini | NMLS 143962 | Certified Mortgage Advisor | Martini Mortgage Group at Gold Star Mortgage Financial Group, Corporation | NMLS # 3446 | 507 N Blount St, Raleigh, NC 27604 | (919) 238-4934 | www.MartiniMortgageGroup.com | [email protected] | Equal Housing Lender

Logan Martini

Logan Martini | NMLS 1591485 | Senior Mortgage Strategist | Martini Mortgage Group at Gold Star Mortgage Financial Group, Corporation | NMLS # 3446 | 507 N Blount St, Raleigh, NC 27604 | (919) 238-4934 | www.MartiniMortgageGroup.com | [email protected] | Equal Housing Lender

Freeze it and opt-out!

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One of the most important assets often overlooked and not properly protected by many is their credit score.  The single most important thing you can do to protect your credit and not fall victim to identity theft is a credit freeze …the second most important thing to do is to opt-out of pre-screening. 

…there is no guarantees that a freeze will protect you 100% of the time.  One may still steal your non public private information or maybe one may hack into one of your existing open accounts  however it is my opinion, the credit freeze combined with opting out of unwanted credit solicitation is the most reliable defense you have in your arsenal to prevent identity fraud.

kevin martini best raleigh mortgage broker

Kevin Martini

Certified Mortgage Advisor & Raleigh Mortgage Broker

Martini Mortgage Podcast | Episode 167 | Freeze it and opt-out

Resources discussed in episode 167 of the Martini Mortgage Podcast

OptOutPreScreen.com

A free a centralized service which is a joint venture between Equifax Information Services, LLC, Experian Information Solutions, Inc., Innovis Data Solutions, Inc., and TransUnion, LLC  (a.k.a. Consumer Credit Reporting Companies) to accept and process requests from consumers to “Opt-Out” of firm offers of credit.

WEBSITE: www.OptOutPreScreen.com

PHONE: 888-5-OPT-OUT (888-567-8688)

How to Freeze YOUR Credit

The process to freeze your credit is free but the benefits are priceless. The fastest way is online however you can also request a credit freeze by phone or mail. Below is the contact information of each of the credit repositories.

Experian 

Experian Credit Freeze Pagehttps://www.experian.com/freeze/center.html
Experian Phone Number 888.397.3742
Experian Mailing Address Experian Security Freeze
P.O. Box 9554
Allen, TX 75013

Equifax

Equifax Credit Freeze Pagehttps://www.equifax.com/personal/credit-report-services/credit-freeze/
Equifax Phone Number 888.298.0045
Equifax Mailing Address Equifax Information Services 
P.O. Box 105788
Atlanta, GA 30348

TransUnion

TransUnion Credit Freeze Pagehttps://www.transunion.com/credit-freeze
TransUnion Phone Number 888.909.8872
TransUnion Mailing Address TransUnion
P.O. Box 160
Woodlyn, PA 19094

5 Things That Impact Your Credit Score For Mortgage

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Your credit scores usually determine the price you pay for your money (mortgages, auto loans, auto leases, credit cards, business loans, personal loans, etc.). Perhaps the most significant part of your credit report is your credit score. For the purpose of mortgage, credit scores range from 350 to 850, with 850 being the best possible credit score, and 350 being the worst possible credit score. 

Who Pulls Your Credit Will Determine Your Credit Score 

The credit score you see may vary from what a lender sees and your credit score may vary between different debt being requested. This is because everyone has a unique credit score that represents their risk when applying for a new account based on what type of credit is being extended. Every industry has their own credit score model. 

Different models are used to help a lender determine the credit risk for different type of debt. When securing an auto loan, the creditor is likely to use FICO (Fair Isaac Corporation) Auto Credit Score.  When applying for a credit card, the creditor is likely using FICO 8 or VantageScore.  When securing a mortgage, FICO Score 2, 4 and then 5 are used.

Credit Model & Scores Used When Applying For A Mortgage

There are three credit bureaus in the U.S. that collect information about you from your creditors. These bureaus then calculate a credit score based on that information. This means that you have three credit scores, one issued by each of the three credit bureaus:

  • Equifax (model: FICO Score 5 or Equifax Beacon 5)
  • Experian (model: FICO Score 2 or Experian/Fair Isaac Risk Model v2)
  • TransUnion (model: FICO Score 4 or TranUnion FICO Risk Score 04)

Mortgage lenders typically order a tri-merged credit report when you apply for a home loan. The tri-merged credit report gives the lender information from all three credit bureaus. The lender typically uses your middle credit score when they evaluate your loan application. 

(NOTE: YES, the score models used are older versions and newer credit score models are available however Fannie Mae and Freddie Mac guidelines require these older versions be used.)

5 Factors That Determine Your Credit Score For Mortgage

martini mortgage mortgage group best raleigh mortgage lender 1

Payment History has a 35% Impact on Credit Score for Mortgage

The biggest predictor of future payment behavior is past payment performance.  Payment history makes up more than 1/3rd of the credit score for the purpose of mortgage.  

Amount Owed has a 30% Impact on Credit Score for Mortgage

It is not just about the amount of the balance, it is about the balance as it relate to available credit. ‘Amount Owed’ is really the proportion of debt balances compared to the total available credit for that account.

Length of Credit History has a 15% Impact on Credit Score for Mortgage

Established credit accounts with a good track record. Time between older accounts and newer accounts.

Credit Mix has a 10% Impact on Credit Score for Mortgage

A well-balanced mix of credit accounts such as revolving credit, installment loans and mortgage.

New Credit has a 10% Impact on Credit Score for Mortgage

Newly established credit accounts put pressure on credit score until account performance can be established.

65% of your credit score is your payment history and balance-to-limit ratio.

Logan Martini
martini mortgage group at pcl financial group