Scams revolving around refinancing are making headlines these days. If you are considering financing your home, please read this entire article. It may save you a lot of money in the long run. Refinancing lenders who are trying to scam the public will teach their representatives how to manipulate customers into loans that are not in their best interest. There is even some psychology that goes into teaching their employees how to do this.
When a lender looks at your loan application, they are typically looking at three things:
Anything else is irrelevant to your loan approval. They will not look at your credit card payment history, auto payment history, student loans or collections or charge offs. Why is this? Because your FICO score is the numerical value that takes into consideration all of these factors and puts them into a number ranging from 500 to 800.
If you are late on your mortgage payments this will usually increase your interest rate. Bankruptcies will also increase your rate or give you instant denial for a loan. Your loan officer will talk with you about your credit history. They will ask pointed questions regarding late credit card payments or other non-mortgage related issues on your report. You may be asked to provide explanations of why you were late with those payments.
Why is this something to be aware of?
Because they are irrelevant to your loan approval as was mentioned above. You should not be having any discussion regarding your other credit issues. When they discuss your credit issues with you, they are making you feel insecure about your history so that you will be less likely to search out another lender. When you open up about your personal life, this creates a stronger bond between the two of you. You will then be more appreciative of the loan you end up being offered.
The worse your credit history is, the more power the loan officer will have against you to try and manipulate you into accepting a loan that is not good for you. The majority of loan officers know exactly what type of loan you can be approved for the minute they pull your credit. There is no reason for them to dig into your past any further.
If you experience any of this with your loan officer, I suggest you find another reputable lender to work with.