What is not included in your credit profile is; race, religion, health, driving record, criminal record, political preference or income.  Your credit profile is about your use of money and credit extended to you, not who you voted for in the last election, or where you Mother was born.

What is important is the credit score, which ranges between 350 and 950. The higher the number, the less risk, the lower the number, the higher the risk.  Well, the risk is the likelihood you will pay the loan back.  A person with a high credit score is more likely to repay a loan and they have done with other loans.  Someone with a low credit score has been scored low for a reason, whether it be late payments, non payments, and even judgments. 

Previous credit (payment history) is 35% of your credit score.  30% of your credit score is your current level of indebtedness, the balance you hold compared to credit limit.  15% is the time the credit has been opened (the longer the better).  15% is based on the types of credit, installment loans, revolving and debit accounts; and the last 5%  is the number of inquires, i.e., how much credit you are trying to get.

The most important part of your credit is paying your bills on time, no matter how little the debt.  This will show mortgage brokers that you will pay your mortgage on time.  Before going to a mortgage broker, order copies of you credit reports from www.freecreditreport.com.  As mandated by the government, everyone is entitled to one free copy of their credit report from each of the three credit bureaus, Trans Union, Experian, Equifax.  It is important to monitor your credit often, as identity theft is one of the fastest growing crimes today.   Know what you are walking into before you go looking for your pre-approval. 

Before you go looking for a house, know how much you can spend.  And this is what you find out from your mortgage broker.  A mortgage broker will take a look at your credit history and your income and determine how much house you can afford.  What you can afford is what you can pay out each month for mortgage, taxes and insurance and still live.  All your debts should be around 28% of your gross (before taxes) income.  There are some programs that will go up to 40% debt income ratio.  But be careful!  You don’t want to be house broke!

As you are trying to save, keep in mind that closing costs are around 3% of the purchase price.  You will also need to pay for your lawyer and have an Home Inspector evaluate the home.  Because of the recent foreclosure crisis, we may have seen the last of the days of 3%, 5%  or No Money Down home loans.  The risk is too high when home buyers go into a mortgage with no equity.  So start saving!  Traditionally, to purchase a home, you needed 20% down and 6-9 months of reserves for emergencies.  Talk to your mortgage broker about your circumstances and see  what they suggest.  With the proper research and preparation, you will soon be a home owner and earning all the privileges thereof!

So my client has been waiting for the past agent to return a phone call for the past two weeks, and finally gave up, agent #3.  The second agent gave the same response, or should I say lack of  response for weeks as did agent #1.  Within an hour of speaking with this new client, I set up a search, sent an email confirmation, spoke with the mortgage broker and received a pre-approval.  The client has been waiting two weeks for just a return phone call.

This person said to me that maybe if the home purchase was $500,000, the agents would have returned a phone call or email. So that’s the problem, do the home seekers that are spending less, not deserve the time and attention we would give a luxury client? Should these people just sit by the wayside while agents give half million dollar clients all the attention? Someone may be spending $150,000 now, but we all know, if the service is good, that client will come back and send others. So that $150,000 will be $450,000 is five years and up from there.  Not to mention the referrals. 

I felt ashamed of the experience this person has had.  It is a direct reflection on the entire profession.  One of the reason why owners are trying to sell their own homes.  And if clients can’t get the service they deserve, why should they use an agent?  There are people that are only looking, who like to look at homes, and have no interest in buying.  As an agent we know how to recognize those shoppers and how to handle them.  But you can’t treat everyone that way. Actually no one should be treated that way, and should garner some attention.  For they may not be buying, but who doesn’t know someone who wants to buy a home?

I am a doctoral student in Ethical Leadership and it is so ironic to me how many situations like this one are coming my way.  I guess I’m in the right program.