How To Prepare to Become a Homeowner

START. No matter what your timeline for when you plan to become a Homeowner. START. Put “all your ducks in a row” as it were.
START. Now. Why? Too many Homebuyers wait until they’re actively looking for homes. Then it becomes overwhelming because of the lack of preparation.   

Think about it. You’re out on a Sunday afternoon visiting three open houses you saw advertised on Zillow. The first house is a wreck, and a bank foreclosure to boot (and that wasn’t in the advertisement!). But the second house, painted in a lovely yellow tone with the perfect fieldstone finish around the foundation, in great condition, and priced right…now this is a house worth considering!

So you want to put in an Offer. But you are not yet Prequalified for mortgage financing. (Preapproved? Prequalified? Same thing, no matter what the real estate agents tell you!). Oh, and you don’t even have an Attorney selected. Home Inspector? Who? What? WAIT…whoa…WOW…this is overwhelming!!!

START. Find a great Licensed Mortgage Loan Originator with a reputable Direct Lender. If you follow the “get pre-approved” link on Zillow, you’ll be referred to an excellent and local mortgage professional. But don’t stop there. For that mortgage professional, or any mortgage professional you come across in your research, do a little background checking…you know, like a “Private Detective!” You can verify the license of your mortgage professional at National Mortgage Licensing System Consumer Access HERE. When you’re on the site, click on “Self-reported Employment History.” If the mortgage person was managing a pizza restaurant three years ago, well, I’ll let you draw your own conclusions. Remember, longevity in this business is hard to accomplish and in the doing, the mortgage pro gets better and better and…yes, experience counts!

START. Get referrals to two very important members of your home-buying team: a great Attorney who specializes ONLY in real estate and a Certified Home Inspector. Interview them; review the cost; determine if you like these pros. Put them on notice you’re not yet ready to buy, but you’ll want them at a moment’s notice once you’re out there shopping for a home.

START. Credit: let the mortgage professional tell you if your credit is sufficient for mortgage financing. I meet lots and lots of consumers who—while checking their own credit reports—decide ON THEIR OWN that their credit isn’t sufficient. Except…wait for it…you don’t work for the bank! Let the bank tell you if your credit is acceptable, or not. You’ll most likely be surprised.

START. Income: here’s the basics for qualifying for a mortgage loan. 2 years consistent employment history. We’ll use your current salary to qualify (not what you were paid before you got that big raise three months ago). Unless you get lots of overtime, or bonuses are a regular occurrence, or if you are Self-Employed, we don’t need to average your income; we’ll use the current salary. For those other income situations, your mortgage pro will do the math for you based on the different loan program guidelines (FHA has different requirements from FannieMae and different from FreddieMac). If you recently graduated college with a degree, we can use the education history (in most cases) towards the two year requirement.

START. CASH!!! Here’s the thing, even if you’re buying in New York, where the closing costs are the highest anywhere, you really can buy a home with minimal down payment. Because many loan programs allow the Seller to pay your closing costs through a “Sellers’ concession.” You’ll negotiate this into your purchase price when you make an Offer.

START. Put your team together. Review your Credit, your income, your cash. Rely on a trusted mortgage professional to tell you exactly where you stand today for a mortgage loan. Focus on monthly payment. Even if you’re not going out looking for homes until next summer, preparing for that experience is one of the smartest things you can do today in your endeavor to become a Homeowner!

Do you have questions?  Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Happy House Hunting!

NO CREDIT? Not a BAD Thing

In the absence of a credit score and established credit history on a credit report, alternative credit references are perfectly acceptable to help you obtain an FHA mortgage.

This morning I attended an FHA Underwriting web-conference. While I’ve been originating FHA Insured Loans for 21 years, I think it’s important to stay up to date with guideline changes. More importantly, the web conference gave me the opportunity to speak directly with an FHA Underwriter who sees FHA loans from all walks of life and from all over the country.

I had a few questions, but my primary question had to do with clients who don’t have established credit histories.

I’ve blogged about this before here at because this is a situation I encounter frequently here in the NY Metro region. Many of my clients are immigrants to the United States (just like ME!), and often they have limited or non-existent credit profiles.

This isn’t a BAD thing when applying for an FHA Insured mortgage loan. Let me put it simply: BAD credit is a BAD thing; NO credit is NOT a BAD thing.
And let’s not confuse “I have no credit” with the reality I often see after hearing that statement from a client and running a credit report: When you say you have NO credit, you really mean NONE, ZERO, ZILCH, NADA. You do NOT mean no credit cards today or auto loans today because you have seven collection accounts, a car reposession, and two defaulted student loans. That’s BAD.

When I run your credit report and encounter NO credit score due to NO credit history, I may still be able to assist the client with an FHA Insured Loan.

What we’ll do next is to establish what’s called an “Alternative Credit Profile.” We can accept other forms of credit that most established adult consumers have: Rental payment histories (cancelled rent checks), Car Insurance payment histories, Cell phone, utility bill, cable bill payment histories. All of these—and other similar items—are acceptable alternative credit references.

In the absence of a credit score and established credit history with credit cards, student loans, auto loans and etc. on a credit report, these alternative credit references are perfectly acceptable to help you obtain FHA mortgage financing to buy your first home.

The FHA Underwriter happily answered my query about such situations: YES, she is seeing many FHA loan approvals with the alternative credit histories in place of an established credit history and credit score for a consumer with NO CREDIT.


Don’t Close those Credit Cards: Your Score could DROP

I have seen folks with fantastic credit have their credit scores drop dramatically because in the months before they met me for the mortgage prequalification they paid off and closed their credit card accounts

Verify. Check it out. Read all about it. “Just the facts m’aam.” That’s me. I hate spouting off about something of which I know nothing, and which I have not verified. Maybe that’s one of the qualities that’s helped me create and maintain a successful career as a Loan Originator since 1989.

Erica, the wonderful and sharply professional office manager at Weichert Property Works in Brooklyn considered cutting up a credit card after she finished paying it off. I argued strongly against that course of action. Her credit score could actually drop if she follows that path.

It’s a little known fact that closing a credit account is almost as bad as having a collection account on your credit history. I’ve seen the results first hand in my role as Loan Originator. Let’s face it, when you’re buying a house, if you can afford to do it, you pay off your outstanding credit cards so you walk into your new home debt free! I know because I did it, too when I bought my first house. You want a clear mind and a worry-free attitude about extra bills on top of your mortgage payment. But the results on a credit score are contrary to that logic, unfortunately.

I have seen folks with fantastic credit have their credit scores drop dramatically because in the months before they met me for the mortgage prequalification they paid off and closed their credit card accounts. Perfect credit histories are affected with a lower score because 12 accounts were paid and closed and reduced to 2 or 3 accounts. I applaud that conservative thinking, but apparently the credit scoring engines don’t.

In plain English, what happens is that you have fewer active credit accounts, therefore you are using less credit therefore your credit score has less to work with in determining your overall use of your credit. That’s the flawed logic (IMHO) of the credit scoring system.

While this opinion is derived originally from my professional experience, I took the time to verify the facts with the source of all things credit score related: The Fair Isaac Corporation, or FICO, the folks who created the algorithm used in credit scoring. You can find that information right HERE.

Hope that helps! (ERICA!)

FTC Strikes Against ID Theft Protection “Guarantee”

The Federal Trade Commission announced a settlement with LifeLock for misleading claims about its Identity Theft Protection services.

The Federal Trade Commission, in its advancing campaign against scams and misleading marketing with regards to credit reporting, credit scores and Identity Theft Protection, recently announced it had coordinated a settlement with LifeLock for misleading claims about its Identity Theft Protection services.

“While LifeLock promised consumers complete protection against all types of identity theft, in truth, the protection it actually provided left enough holes that you could drive a truck through it,” said FTC Chairman Jon Leibowitz.

LifeLock agreed to pay $12 Million to settle charges by the FTC and 35 States that Identity Theft Prevention and data security claims were false.

“This agreement effectively prevents LifeLock from misrepresenting that its services offer absolute prevention against identity theft because there is unfortunately no foolproof way to avoid ID theft,” Illinois Attorney General Lisa Madigan said. “Consumers can take definitive steps to minimize the chances of having their personal information stolen, and this settlement will help them make more informed decisions about whether to enroll in ID theft protection services.”

More information about the settelment and about LifeLock’s false claims on the Federal Trade Commission website.

Protect Yourself from Identity Theft: FREE

Why pay the Credit Agencies for Identity Theft Protection? You can do it yourself for FREE thanks to free information from Uncle Sam.

Those television commercials will scare you into paying for some kind of ID Theft protection from one (or all, depending on your level of paranoia) of the three major credit reporting bureaus (Experian, Trans-Union, Equifax). Since Congress unfettered these agencies from the constraints of selling credit products to the consuming-public, ID Theft protection and credit score watch (allegedly to make your credit history better) are the hot products that consumers fork over cash money for each month in the form of “ID Theft” prevention monitoring and whatnot. Usually the fees are in the range of $10-15 a month, but they can be higher, $25-40 depending on the level of monitoring the consumer desires.

The problem I have with all these services is that the savvy consumer, by spending just a little time each year (and almost NO money) can pretty much get the same level of protection without subscribing to anything nor sending money to the credit bureaus.

Here’s a link to the Federal Trade Commission website that has a wonderful pdf brochure on all you need to know about Identity Theft and how to protect yourself against ID Theft. It’s FREE and it’s here: FTC: Fighting Back Against Identity Theft

Take some time to read the information, then set yourself on the path to protecting your Identity FREE of CHARGE.

I welcome Comments for all my blog entries. I will be happy to review and approve all legitimate comments provided by readers of I do not permit unfettered access to comments for obvious reasons: mortgage spammers and their ilk. If you wish to Comment on any entry, please do so and I will quickly review and approve. Thanks for reading Hope that helps!