Where do you begin to
secure finances for purchasing a new home,
refinancing an existing home, or obtaining
a real estate equity line of credit? Loan
acquisition can get confusing, but you can
simplify the process and avoid a lot of
potential headaches by getting off to a
good start. Here are a couple of ways to
Build your green
Organizing and compiling all pertinent financial
documents into a green file is an absolute
must for any potential borrower. Think of
the green file as a resume or profile that
will give lenders an idea of what kind of
debtor you might be. The typical green file
• Financial statements
• Bank accounts
• Credit card
• Auto loans
• Recent pay stubs
• Tax returns for two years
Another means by which lenders
gauge your trustworthiness as a borrower
is through your credit rating. These indicate
your credit history, which includes such
crucial information as the number of your
open loans and the punctuality of your past
• Treat your credit
Credit ratings are important because they
often determine whether or not you will
be approved for a loan and what your interest
rate will be. Thus, you cannot take your
credit seriously enough! We suggest checking
your credit reports at least once a year
or before making any major purchase to ensure
the accuracy of the information contained
• What the scores mean.
Ratings usually vary between 400 and 800.
Anything with a middle credit score of 680 is good (based upon all three of your credit scores). If you exceed 740, you are considered premium. FHA and VA loan guidelines generally accept lower scores (600 or above) for underwriting purposes. However, scores below 600 are considered and approved on a case-by-case basis, so please call to discuss.
• Determine your credit rating.
You can do this by contacting a credit reporting
agency such as Equifax or
Experian. Above all, don’t hesitate
to consult with your lender if you need
to improve your rating.
Prioritize your costs and savings.
Buying real estate wisely
is all about choosing what to spend for
• Prioritize your
Down payments, closing costs and additional
expenses (such as inspections) should be
at the top of your list. On the other hand,
be sure to pay down on your current revolving
and high-interest rate debts, such as credit
• Remember: lenders like stability.
Instill confidence in your potential lender
by avoiding any big, sudden moves both in
your career and your finances. If that job
change or big budget purchase absolutely
cannot be postponed, check with your lender
first and consider the consequences.