Friday, May 22, 2009

A Housing Update - meeting the loan counselor, more paperwork, and lessons learned

Did you all know? I feel like we should have known. We had to send in all of our recent financial paperwork, and we did. 6 weeks ago. Of course we'd have to give them all of our updated numbers. Why didn't we think of this ahead of time?

Besides our obvious omission, the meeting with ACORN Housing's loan counselor went well. She threw some numbers around (ones that we can work with), told Columbia what else we needed to bring in and gave us a lot of hope. The meeting also gave us some answers to those nagging questions. We will continue to work with ACORN, at least for now. The benefits they offer (no PMI, help with closing costs, etc) do seem to be worth the hassle. Also, the timing might be perfect. When we give them the newest papers (end of next week, I think) they send our packet to Citibank. Citi gets back to them in 2-3 days with the pre-authorization. That lasts for 90 days. Our lease is up in 4 months. We can always stay here a few extra months if we need to, but it would be nice if that didn't have to happen.

Here are a few things we learned from the meeting about looking good to lenders:
- Credit Cards are Important to Have: While many frugal bloggers sing the praises of cutting up your credit cards, it turns out having credit cards demonstrates responsibility to lenders. As Columbia only has 2 credit cards, we have to show proof of 'soft credit.' Thankfully our phone company and ConEd are willing to send out letters stating that we pay our bills on time.

- Credit Cards are Important to Use: While Columbia and I are longtime users of credit cards, it turns out we only use 1 now. The loan counselor knows this, as does anyone who looks at Columbia's credit report (i.e. the bank). The counselor said that not using a credit card could actually work against us. While having a card demonstrates a companies trust in us, lenders want to know we can use credit responsibly. We are going to purposefully charge on both cards each month from now on.

- Don't Cancel that Overdraft Protection, Just Make Sure You Don't Use It: Columbia and I were not on top of our finances a few months ago, and didn't transfer money to the checking account (from our high-yield savings) when we needed to. Overdraft kicked in. In the past it had not been a problem when this happened, but our bank charged us this time. Everyone's trying to earn as much as possible in this economy, I guess. We decided to cancel overdraft and be vigilant about watching our account balances (setting up reminders to do so on our Google calendar). If we could have turned back time... Overdraft protection is another form of credit and would have worked in our favor.

- It's Important to Check your Credit Reports: While Columbia has an awesome credit score (yea honey!) we didn't actually know the number until he went to the meeting. It would have been nice to be prepared. Also, there's an address on one of the reports that is inaccurate. Columbia needs to have that removed. There could have been other inaccurate information on the report that could have weighed against us. Periodically checking your credit report is not only wise, but free. Our goal will be to check every 6 months.

We have more work to do, but we also have a lot of hope. It seems like we are headed in the right direction to be home owners. The biggest challenge now seems to be not getting caught up in looking for apartments online - incase the bank's numbers are different from the loan counselor's. Oh, Street Easy, you do know how to tempt a person...

No comments: