Ignoring Credit Issues Only Causes Home Loan Delays And Stress 
If you’re planning to refinance your existing mortgage or buy a home in Orange County, and need a loan for the purchase, there are things that you can and should do, in advance, to save time and money, and alleviate stress.
Believe it or not, some of the smallest issues can derail a home loan, and often, these details could have been dealt with prior to even completing a loan application. If you are aware of either of the situations mentioned below, I urge you to deal with them right away, as ignoring them will only cause anxiety and delays in your home loan process.
Ignoring Credit Issues Can Cost You Money And Your Dream Home
When refinancing your home loan, delays can cost a good deal of money. With every delay, comes the possibility that the lock may expire on your interest rate, and more often than not, it will cost you money to extend the lock.
Avoiding delays and resolving credit issues is especially important when you’re buying a home in Orange County, because a typical escrow is anywhere from 30 to 45 days, which does not leave you much time to sort out unpaid collection accounts or erroneous credit reporting. If you cannot get an item removed or updated on your credit report in time, your mortgage application may be denied, or you may have no choice but to agree to less than favorable home loan terms, such as a higher interest rate, which will reduce the price of home that you qualify for.
In addition, you will want to pay attention to any stipulations that may have been written into your purchase contract, when you’re buying a house in Orange County; It is not uncommon for a sellers agent to ask for you, the buyer, to pay a “per diem” or daily fee to the seller, if escrow does not close on time.
Common Issues That Go Unresolved Until It Is Too Late
Collections-
Even low balance collection accounts can result in stressful, home loan funding delays and, in the end, will cost you more money.
Dealing with unresolved collections when your home loan is already in process puts you at the mercy of the collection company. If you can deal with a collection in advance, then you will may have the ability to negotiate a reduced payoff with them. However, if they know that you are desperate to complete a home loan, they will use it to their advantage, and are less likely to bend on the settlement amount.
Incorrect Information And Errors on Your Credit Report-
This happens more than you would think, and even items that are legitimately not yours, can cause major delays and headaches for you when you’re trying to obtain a home loan.
The credit bureaus have up to 30 days to verify items shown on your report, under credit reporting laws and, if a creditor cannot provide written proof as to the validity of the information, then the 3 bureaus are required to remove the item from your credit report.
Steps You Can Take To Avoid Home Loan Delays?
1) Settle Collections Prior To Contacting A Mortgage Professional Or Looking For Your Dream Home-
Because collection companies pay pennies on the dollar to purchase unpaid debt, they are often willing to settle for a lesser amount than what you owe. They may also discharge penalties and late fees, as a way to entice you to pay them quickly, so they can recoup their initial investment. However, if you wait until the last minute, and tell them that you’re under time restrictions due to your pending home loan, they will be less likely to work with you on a reduced settlement amount.
2) Document Any Correspondence And Collections That You Pay Off And Get Something In Writing-
On occasion we see credit reports that still reflect outstanding collection accounts, even after our clients have paid them in full. Unfortunately, unless you have something in writing, that you can provide as proof, there is nothing that the credit bureaus can do to remedy the situation. Collection companies do not care to report payments once they have your money, and you may even be forced to pay the debt twice, just to procure your home loan. The following are suggestions, to ensure that this doesn’t happen to you:
- Document any and all correspondence with the collection company, including the dates and times that you spoke, and try to correspond as much as possible, via email.
- Make payments to collection companies with a check or cashier’s check only and keep a copy in a safe place, as evidence of payment. Do not ever make payment in cash, by visiting them in person.
- Get the agreement from the collection company in writing, prior to sending them payment.
- Send a copy of the agreement and evidence of payment to the credit bureaus immediately, and ask that they update your credit report to reflect the payment.
The written agreement from the collection company should include the following details:
- Your name
- The collection company’s name
- The amount that they have agreed to accept
- The original creditor’s name- ie: Macys, Chase, etc…
- Verbiage stating that the amount paid constitutes “payment in full, to satisfy the outstanding lien, judgment, or collection”
3) Monitor Your Credit Report-
Being proactive is vital when you’re attempting to qualify for a home loan in Orange County CA. One way to safeguard yourself and be proactive is to monitor your credit report on a regular basis, and the FTC has approved annualcreditreport.com, as a trusted site where consumers can obtain an annual, free credit report.
So remember, in addition to saving for a down payment, there are other things you should do before applying for a home loan in Orange County CA.
Related Articles:
- How To Avoid Sabotaging Your Orange County CA Home Loan Pt 1
- Help For Military Personnel That Were The Victims Of Foreclosure
- The OC Real Estate And Loan Donation Program
- Home Financing FAQs
- Choosing Your Home
About the author, Gina Lemos, and our Orange County, California team of Realtors®
We are members of the Pacific West Association of Realtors®, proudly serving home buyers and home sellers in Orange County, California, and the surrounding areas.
We specialize in homes for sale, and marketing homes to sell in Anaheim Hills, Brea, Corona, Norco, Orange, Orange Park Acres, Placentia, Tustin, Villa Park, and Yorba Linda, California
We hope that you’ll visit our site frequently to search for homes for sale in Orange County, California, and please contact us if we can assist you with any of your Orange County, California real estate needs.
Gina Lemos
Licensed Realtor® and Mortgage Loan Originator
8181 E Kaiser Blvd
Anaheim Hills, CA 92808
P: (714) 721-6024
F: (714) 998-3678
CA DRE # 01277795 NMLS # 325704
