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NJ Mortgage Resources

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          Learn more about the NJ mortgage process with our educational resources for homeowners.

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        • What is a Mortgage?A mortgage is simply a lien that is put on a property by a bank or lender of money to assist a consumer to obtain funding in order to purchase that property.
        • Mortgage Pre Approval vs. Pre QualificationAs a technical matter is there are actually 3 levels of “Pre-Approval” available as a lead-up to your mortgage.
        • What Factors Go Into Qualifying for a Mortgage?There are four main categories that a bank will review when they qualify you for mortgage financing, otherwise known as the four pillars of qualifying: Income, Assets, Credit, and Debt.
        • What is PMI Insurance?Private Mortgage Insurance (PMI) is quite simply an insurance policy that protects the mortgage lender in case of default on the mortgage.
        • New Jersey Mortgage Application ChecklistBeing fully prepared leading up to your application can prevent a lot of troubles and tribulations, which can be detrimental and emotionally taxing especially after you’ve gone to contract on your new home.
        • What Is The Minimum Down Payment For a House in NJ?Depending on your circumstances you may be looking to get into a property for the least amount of cash possible.
        • What Are The Three Different Types of Mortgage Lenders?There are 3 different types of lending companies that originate mortgage loans. Banks, Brokers, and Mortgage Bankers.
        • What Determines Mortgage Rates?A variety of factors lend their hand in the determination of where a particular lender will be on rates.
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Mortgage Qualifying Factors: Credit

Credit is probably the most scrutinized issue of qualifying that the bank will review. Not only does it indicate if a customer has a pattern of being late on financial obligations, but it gives an overall perspective to the bank of how seriously the potential customer takes his debt responsibility. The report will show inquiries made to the report in the last year. These inquiries may be signs that the customer has been out shopping for additional credit. For people with questionable credit to begin with this is a definite red flag. Overall, it is always a good idea to keep your credit report up to date and clean. You are entitled to one copy of your report per year for each of the three reporting agencies (Trans Union/Experian/Equifax). We recommend you order from Annualcreditreport.com, which is the only official site explicitly directed by Federal law to provide them.

Credit Scoring Factors

Credit scoring is based on a series of complex algorithms which take into account over 200 different factors. Some of these factors include, but certainly are not limited to:

  • Payments made more than 30 days past their due date
  • The amount of credit already granted to the customer
  • The amount of credit currently in use by the customer
  • The number of inquiries in the last year
  • Bankruptcies, Foreclosures, Judgments

Can I Remove Negative Items From My Credit Report?

All derogatory information will generally stay on your credit report until they are cleared up. Once cleared and paid, it will take an additional seven years to completely remove them from your report, except for bankruptcies and foreclosures, which stay on for ten years past their discharge date. The lender will always allow for some leeway on your report when qualifying you, but keep in mind that every late is scrutinized, especially mortgage rates from the last 2 years. Before applying, it is always a good idea to allow your loan officer to pull a copy of your report to see if there will be any issues that may come up to prevent you from qualifying under “A” credit standards.

Many times, the lender may request that you write an explanation for any rates that may show on the report. Generally, it is not a good idea to say that you forgot, or that 3 checks in a row were lost in the mail. Generally, reasons that the underwriter is looking for would include short-term traumatic life incidents that caused you to fall behind such as an illness, loss of job, or unexpected major necessary expense that came up around the time of the latest.

What If I Don’t Qualify?

If you cannot qualify for one reason or another under “A” credit, the loan officer may be able to point you in the direction of a government-sponsored FHA mortgage or a “B/C” credit loan. Though the terms may not be quite as favorable as conventional financing, these types of loans will carry more relaxed credit guidelines and qualifying ratios and they may help you get into the house that you would not normally be able to. Once your credit has had time to “season” you may be able to come back and refinance your loan to “A credit” in a year or two. Just make sure you keep strictly disciplined with paying bills on time until then.

Finally, some lenders may be able to provide you with alternatives for increasing your credit score during the loan application process in order to get you access to better rates or terms. Consult with your chosen lender to see if this is an option.

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Related Links

  • What Factors Go Into Qualifying for a Mortgage?
  • Mortgage Qualifying Factors: Income
  • Mortgage Qualifying Factors: Assets
  • Mortgage Qualifying Factors: Debt
  • Mortgage Qualifying Factors: Credit

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NJMortgageResources.com provides homeowners with all the information they need to navigate the complex New Jersey mortgage process and get the best rate possible for their situation. Browse our educational resources and get a free customized rate quote from one of our top NJ mortgage specialists who can also help you with any additional information you may need or questions you may have.

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    • What is a Mortgage?
    • New Jersey Mortgage Application Checklist
    • Mortgage Pre Approval vs. Pre Qualification
    • What Is The Minimum Down Payment For a House in NJ?
    • What Factors Go Into Qualifying for a Mortgage?
    • What Are The Three Different Types of Mortgage Lenders?
    • What is PMI Insurance?
    • What Determines Mortgage Rates?
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Resources

  • What is a Mortgage?
  • New Jersey Mortgage Application Checklist
  • Mortgage Pre Approval vs. Pre Qualification
  • What Is The Minimum Down Payment For a House in NJ?
  • What Factors Go Into Qualifying for a Mortgage?
  • What Are The Three Different Types of Mortgage Lenders?
  • What is PMI Insurance?
  • What Determines Mortgage Rates?

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