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| Financing and Mortgage |
Your Guide to Financing and Mortgage
Although a newcomer to the Bay Area, you may not be new to the homebuying process. Even so, it’s helpful to review all the steps involved as well as San Francisco Bay Area resources and conditions. Since San Francisco has a relatively healthy real estate market, finding the right type of mortgage for your home should not be difficult. With the proper research and the help of a reliable real estate professional, purchasing your home in the Bay Area should be a rewarding experience.
NAVIGATING THE FINANCING PROCESS
As you prepare to purchase a home and seek financing, it is best to first have a realistic view of all the steps involved. The financing process can take anywhere from 15 to 45 days, but typically runs about 30 days. Your agent should be involved throughout the process to help it run smoothly. The basic timeline for what will happen along the way is as follows and is covered more thoroughly in the chapter. For additional expert articles about financing and obtaining a mortgage in the San Francisco Bay Area, visit www.RelocatingToSF.org.
HOW IS YOUR CREDIT?
Before you even begin applying for a mortgage loan, you’ll need to evaluate your credit. There are three major credit-reporting agencies in the United States that maintain records of your use of credit: Equifax®, Experian® and TransUnion®.
The records that are maintained are called credit reports, and lenders will want to check these when you apply for credit. Generally, lenders also will want to know your credit score. A credit score is a number that summarizes your credit risk, based on a snapshot of your credit report at a particular point in time. A credit score helps lenders evaluate your credit report and estimate your credit risk. By reviewing this report beforehand, you can identify any issues due to fraudulent activity and work toward correcting them.
NATIONAL CREDIT-REPORTING AGENCIES
To request a free copy of your credit report once a year, go to www.annualcreditreport.com or call (877) 322-8228. You can also inquire at www.FTC.gov.
FICO® SCORES
The most widely used credit scores are FICO® scores, the credit scores created by Fair Isaac Corporation. Lenders can buy FICO® scores from all three major credit-reporting agencies. Lenders use FICO® scores to help them make billions of credit decisions every year. Fair Isaac develops FICO® scores based solely on information in consumer credit reports maintained at the credit-reporting agencies.
Your credit score influences the credit that is available to you as well as the terms (e.g., interest rate) that lenders offer you. It’s a vital part of your credit health. Understanding your FICO® score can help you manage your credit health. By knowing how your credit risk is evaluated, you can take actions that may lower your credit risk—and thus raise your credit score—in time.
— Why You Want a High FICO Score
According to Fair Isaac Corporation, the difference between a FICO® score of 620 and 760 often can be tens of thousands of dollars for the life of your loan. A low score can cost you money each month or even stop you from refinancing at a rate you know other people are getting.
— How Are FICO Scores Calculated?
Different credit data are collected to determine your credit score. These data can be grouped into five categories weighed at different percentages, which reflect their importance in determining your FICO® score. The FICO® score is based on your credit history and compilation of your payment history, outstanding credit, length of credit history, new credit you’ve acquired or applied for and types of credit used.
Although a newcomer to the Bay Area, you may not be new to the homebuying process. Even so, it’s helpful to review all the steps involved as well as San Francisco Bay Area resources and conditions. Since San Francisco has a relatively healthy real estate market, finding the right type of mortgage for your home should not be difficult. With the proper research and the help of a reliable real estate professional, purchasing your home in the Bay Area should be a rewarding experience.
NAVIGATING THE FINANCING PROCESS
As you prepare to purchase a home and seek financing, it is best to first have a realistic view of all the steps involved. The financing process can take anywhere from 15 to 45 days, but typically runs about 30 days. Your agent should be involved throughout the process to help it run smoothly. The basic timeline for what will happen along the way is as follows and is covered more thoroughly in the chapter. For additional expert articles about financing and obtaining a mortgage in the San Francisco Bay Area, visit www.RelocatingToSF.org.
- You submit the completed 1003 application and any required supporting documentation to the lender.
- The lender orders an appraisal of the property, a credit report and begins verifying your employment and assets.
- The lender provides a good-faith estimate that includes closing and related costs, plus initial Truth in Lending disclosures, which must be provided by your lender within three days of first pulling your credit report by federal law.
- The lender evaluates the application and your supporting documentation, approves the loan and issues a letter of commitment.
- You sign the closing loan documents, and the loan is funded.
- The lender sends its funds to an escrow account.
- All appropriate documents are recorded at the County Recorder’s Office, the seller is paid and the title to the home is yours.
HOW IS YOUR CREDIT?
Before you even begin applying for a mortgage loan, you’ll need to evaluate your credit. There are three major credit-reporting agencies in the United States that maintain records of your use of credit: Equifax®, Experian® and TransUnion®.
The records that are maintained are called credit reports, and lenders will want to check these when you apply for credit. Generally, lenders also will want to know your credit score. A credit score is a number that summarizes your credit risk, based on a snapshot of your credit report at a particular point in time. A credit score helps lenders evaluate your credit report and estimate your credit risk. By reviewing this report beforehand, you can identify any issues due to fraudulent activity and work toward correcting them.
NATIONAL CREDIT-REPORTING AGENCIES
- Equifax: (800) 685-1111, www.equifax.com
- Experian: (888) 397-3742, www.experian.com
- TransUnion: (800) 916-8800, www.transunion.com
To request a free copy of your credit report once a year, go to www.annualcreditreport.com or call (877) 322-8228. You can also inquire at www.FTC.gov.
FICO® SCORES
The most widely used credit scores are FICO® scores, the credit scores created by Fair Isaac Corporation. Lenders can buy FICO® scores from all three major credit-reporting agencies. Lenders use FICO® scores to help them make billions of credit decisions every year. Fair Isaac develops FICO® scores based solely on information in consumer credit reports maintained at the credit-reporting agencies.
Your credit score influences the credit that is available to you as well as the terms (e.g., interest rate) that lenders offer you. It’s a vital part of your credit health. Understanding your FICO® score can help you manage your credit health. By knowing how your credit risk is evaluated, you can take actions that may lower your credit risk—and thus raise your credit score—in time.
— Why You Want a High FICO Score
According to Fair Isaac Corporation, the difference between a FICO® score of 620 and 760 often can be tens of thousands of dollars for the life of your loan. A low score can cost you money each month or even stop you from refinancing at a rate you know other people are getting.
— How Are FICO Scores Calculated?
Different credit data are collected to determine your credit score. These data can be grouped into five categories weighed at different percentages, which reflect their importance in determining your FICO® score. The FICO® score is based on your credit history and compilation of your payment history, outstanding credit, length of credit history, new credit you’ve acquired or applied for and types of credit used.
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