Sooner Vs. Later Follow Up

First of all, thank you dear readers for being patient with me this week. I’ve been in Atlanta for my sweet granddad’s funeral. Instead of writing about mortgages I’ve been hugging aunts, wrangling nephews, reminiscing with cousins and eating home cooked food prepared by my granddad’s Sunday school class. Can we all together give a collective sigh of thanksgiving?

I’m back home in Houston now, glad for the time I had with my family, and am somewhat recovered from the initial blast of hot soggy air that hit me when I stepped off the plane back in H-town.

In the midst of unpacking and cleaning and getting caught up on writing and such, I wanted to fill you all in on something that happened in the office recently. If you saw my sooner vs. later chart, you may have noticed a small snippet about getting pre-approved.

About six months ago, a nice man contacted Chad and inquired about getting a mortgage. We’re going to call him Theodore so that I don’t have to keep typing “the man”. I do realize Theodore requires more key strokes, but I am trying to really suck you into the story, and calling him Theodore helps me.

Theodore planned to buy a house in about six months (which would be now, since this started six months ago), but wanted to get all his ducks in a row first. Chad suggested Theodore get pre-approved for a home loan in order to get a clear picture of what he could afford, what type of interest rate he’d be looking at, etc. The reason getting pre-approved is important is because that’s when the ole Bosses pull a client’s credit report. And your credit score impacts your interest rate. That’s not the ole Bosses rule, that’s just the rule. I’m not really sure whose rule it is to be honest with you, but I know Chad and James have to follow it and not ask any questions.

Anyway, Theodore didn’t want his credit pulled yet. He said he was pretty sure his credit was great, and there was no point in pulling it before he was ready to buy a house. Chad obliged because he is a very nice mortgage banker.

But ah HA! Guess what happened! Now, six months later, Theodore is ready to buy a house. Chad pulled his credit and found a measly $88 overdue medical bill from four years ago. You know what that measly unpaid, forgotten $88 did to the man’s credit? Tanked it, I tell you. Okay, I don’t know that it tanked it, but I do know that it lowered his credit enough to impact the mortgage. And now, because the man wants to buy a house soon, he is paying 1/8 of a percentage higher interest rate than if he had great credit.

But here’s the thing. If Theodore would’ve given the green light to have his credit pulled six months ago, Chad would have had time to help him resolve the credit problem (not by any crooked measures, but smart measures like having Mr. Theo pay the bill), thus potentially raising his credit score and securing him the better rate.

Next week we’ll discuss the steps folks can take to increase their credit once it’s damaged, but for now my point is sometimes it’s best to have your credit pulled a few months before you plan to buy a house.

If you’d like to know more about how much house you can afford and what your credit looks like, e-mail my ole Bosses. They love it when readers contact them.

Okay folks, back to unpacking. And in case any of those precious octogenarians from the Guiding Light Sunday school class in Snellville, Georgia are reading this, thank you thank you for the food. I so enjoyed that vegan chili.