Notes From The Mortgage Insider

This week I would like to share some information about credit that may be very important for your clients who intend to apply for a mortgage in the near future. I was recently consulted about mortgage financing by a woman who was going through a separation. She wanted to stay in the marital home and buy out her spouse. Although she had sufficient income to qualify her credit profile was not acceptable and I was unable to get her a mortgage. The reason was not bad credit; her payment history was fine. The reason was insufficient credit. It turns out that she had not used any credit in the last 5 years and therefore did not have a credit score! She told me that about 7 years ago she found herself in credit card overload. She paid all the debt off over the next 2 years and decided from then on she would only pay cash for purchases. While it is true that having a zero balance on your accounts is a positive factor, you still have to use the accounts from time to time. A credit score is based on your credit history.  No history = No score. No score = No mortgage.

Because her attorney referred her to me at the very start of her separation process, she will have time to reestablish credit and receive a credit score before the refinance becomes necessary. So her story will have a happy ending, at least as far as her financing is concerned.

Have a wonderful week.

Margie Hofberg, President, Residential Mortgage Center Inc

To contact Margie Hofberg email her at margie@rmcenter.com. If you wish to be notified when she posts her weekly Newsletter simply click on the Subscribe button below. To be added to her weekly Newsletter email distribution list email Renee Bourassa at renee@rmcenter.com.