Zero Down Homes Olympia Weblog

How to buy a home in Olympia for zero down (or dam close).

To buy a home in the Olympia, Lacey or Tumwater area with little or now money down depends on your report card. Your adult report card does not reflect how good you are in a class or a subject. It does reflect how good you are with your credit. It is just a way to boil down to a number that can be easily rated for risk. The company that is most notable is Fair Isaac Corporation (FICO). I know, what’s fair about it? It seems to discriminate for no apparent reason. Well it was founded by Bill Fair and Earl Isaac, hence Fair Isaac.

When they started out over a half century ago they were not well known but were instrumental to credit card companies for rating risk. The rating system is now used for insurance, mortgages, housing (renting) and employment. It has only been over the past 15 years that it replaced human judgment in the acceptance for a home loan. Before that it was a tool and not the determining factor.

Anyone with a fear of big brother watching can rest assure that it was not the government that put this in place. It was the banks and lenders that instituted this system to protect themselves. If you can understand how the system works you can use it to your advantage.

To get a home loan you have to have established credit. Consumer credit like a car loan, student loan, or revolving charge account that tracks your willingness to repay the debt is what the lender is looking for. All this would be reported to Equifax, Experian, and TransUnion so that it is calculated into you FICO score. That loan from mom and dad isn’t going to cut it.

The other things that end up in that score are judgments and leans. You could say that all things financial end up in the score and that will determine how much you pay. The lower the score the more risk you appear to be to the lender.

Now FICO does not tell you how to improve your score. Some of it is cured with time. The longer it has been since the transgression the smaller the affect on your score. So, a 30 day late payment on a credit card last month would have more weight given to it than a 90 day late payment 4 years ago. Recently a client, working with a lender that I introduced them to, purchased a home. They wanted to clean up their credit but after conferring with the lender found it would have a negative impact on their score and make it more difficult to get the a zero down loan. The best advice I can give is to talk to a qualified lender that takes your whole home buying plan in to account.

To give you the most options for financing, the stronger your credit score the better off you’ll be. For a free report how to buy zero down go to www.lovelyhomesolympia.com .

Posted at 05:03PM Aug 05, 2010 by Larry Dickson in Real Estate  |  Comments[0]