Nothing can be done on the file unless we receive all your loan documents, and underwriting decisions cannot be reached without a complete set of those documents. Delivering your documents in a timely manner is really important if closing on time is important to you.
Your very own borrower online portal is the safest and fastest way to deliver your documents. We will send you a link to it and you will be able to upload the documents with ease.
If you have documents that need to be scanned, you could search for and install a free scanner application on your phone, like Tiny Scanner or similar. You take the pictures of each page, it converts them to a pdf and groups the pages to form one document. From there you can upload to our portal or email them to yourself and then upload to our portal.
Usually, the following documents are needed from each borrower:
1. Social Security Card
2. Driver’s license.
3. Paystubs – last thirty days worth of paystubs
4. Award letter if social security income, disability or pension income.
5. W2 – 2017
6. W2 – 2016
7. Tax return – 2017
8. Tax return – 2016
9. Bank Statements – last month.
10. Bank Statement – month prior to last
11. Retirement / Investment account – last quarterly statement.
IF YOU ARE BUYING REAL ESTATE:
12. Evidence of Withdrawal of Funds from your Account after the check or wire deposit was made.
13. Evidence of Receipt of Transfer of Funds if wire for the escrow deposit, copy of the canceled check if check
14. The executed contract between you and the seller.
15. Credit Card form to be filled in.
16. Hazard Insurance. Please shop as soon as you get the wind mitigation report from your inspector.
We normally take loan applications over the phone. This takes about 15 minutes. This will then ensure you that the correct information is entered as borrowers often misstate their income. Or you could come to the office and meet in person, and we will do the loan application face to face.
This page assumes you have a property. It will assume we have pre-approved you and revised most pertinent documents to determine the likelihood of obtaining financing. We would have also generated a Direct Underwriting approval, and we should have had received an Approved / Eligible status. This page will outline for you what you can expect from Bluecastle Lending once you are ready to move forward towards funding your loan.
Getting a Preliminary Closing Disclosure
We will attain a Preliminary Closing Disclosure (Prelim CD) from the title company you selected to handle your closing, so we can find out how much you are going to be charged and accurately will include their fees in your Loan Estimate. On the other hand, if you do not have a preferred Settlement Service Provider, we will place the title order with the title company we normally use. Their fees are accurately listed in our Loan Estimate tool.
Our Loan Estimate is very accurate and it includes all the fees that you will have at closing, It rarely changes at closing. A few things that will never change will be the interest rate (once locked), our origination charges (none), our underwriting charges (none), our processing charges (usually none unless we outsource it), our flood certification charges (none) and tax certification charges (none)
Providing your documents
Nothing can be done on the file unless we receive all your loan documents, and underwriting decisions cannot be reached without a complete set of those documents. If you take your time delivering documents, this will significantly delay your closing date.
We send you a link to our portal where you upload the documents, which are then sent to processing and then delivered to underwriting once the loan disclosures have been signed. Communication and prompt delivery of the documents are the key to a smooth closing.
You will receive, within 3 business days from your loan application an official Loan Estimate plus several other pages worth of different disclosures. We use digital signatures, which makes it very easy to sign from the convenience of your cell phone, work or home computer.
Paying for the appraisal
You will fill out a credit card authorization form and sign it, which will be given by Bluecastle Lending to the Appraisal Management Company. You will directly pay for the appraisal before closing. Usually, the cost is $425 for VA, $420 for Conventional loans, and $520 for FHA.
Submitting your loan to the lender
Once we have all the documents, we will send it to the Junior Underwriter for review. If there are documents that are missing, the file will be sent back asking for those documents. Incomplete files go into the “sleeping room” until they are complete.
Once the Jr. Underwriter deems to have a complete file without any missing documents, it is passed to the Sr.Underwriter to render a credit decision.
We will get, normally within 24 hours from submission, an Approval subject to Underwriting Conditions. As long as those conditions are met, the loan gets funded.
These conditions usually mean more documents that we need from you. Timely delivering these documents is crucial to get the loan back into underwriting. The Jr. Underwriter will not move the file forward until ALL the documents are received. The file goes back into sleeping mode until the documents are received, which at that point the file gets moved again to the Sr. Underwriter to render a credit decision. Most underwriters will have 24 to 48 hours to review the file and render that decision. This process gets repeated until we get a beautiful Clear to Close subject to Pre-Funding Quality Assurance.
Receiving the Closing Disclosure
Once we received the Clear to Close, and file has been checked for completeness and passed the Pre-Funding Quality Assurance, it gets moved forward to Scheduling, usually within 1 business day from the Clear to Close date.
Scheduling department will send the Closing Disclosure. Borrowers must acknowledge receipt of this document in order to be able to close. Current banking laws prohibit funding until at least three business days have passed from the acknowledgment day before being able to fund the loan
Correcting Errors in the Closing Disclosure, and finalizing all the numbers.
Usually the Closing Disclosure has several errors that between the Title Company and Bluecastle we get the lender to correct. Once everyone is happy and all the numbers are correct, the final Closing Disclosure is issued and the numbers can no longer be changed.
You will wire the amount listed in the Closing Disclosure to the title company. This amount will include all the fees. The title company will also receive the wire from the lender and will disburse to the seller and every other party their respective checks.
After signing documents for a while at the closing table, the package gets sent to the lender and upon receipt, it funds your loan. Congratulations! Your loan just got funded! Enjoy!
The most common mistake we see on credit reports with low scores is a low number of active accounts, sometimes even none. This is easy to solve.
Increase the number of accounts
Most people will only work on fighting / removing derogatory information and they forget to build positive credit.
If all you have on your credit report is one account, and that account is negative, 100% of your credit is negative. On the other hand, if you had 4 other accounts, 20% of your credit would be negative instead of 100%.
One of the easiest ways to get positive credit instantaneously is to become an authorized user in someone else’s account that has a low balance, high credit limit on a credit card that has been opened for a long time. You will instantly inherit all their good (and bad) payment history. The results of this one little tool have been nothing short of remarkable.
It is important to know that the owner of the account will not lose any points on their score, or under most circumstances have any consequences to adding you as an authorized user providing you do not get a hold of that credit card.
If you don’t have a family member or friend that can help you out, there are companies that provide you with the service for a fee. Do a Google search for “authorized user tradelines” and see the results. The usual cost is around $500.00 to $600.00 per tradeline.
Another way is to Google “best secured credit cards” and take your pick. Get two, don’t use one at all and do not spend more than $10.00 on the second card. Pay the entire bill every month. You can alternate the $10.00 spending every month in between the cards.
Easily increase your score by 10 – 15 points.
Opting out of unsolicited credit offers via mail, phone calls, and email will rapidly increase your credit score, sometimes even 15 – 20 points. Of course there is no guarantee on the increase, but certainly worth trying. Visit the FTC website and follow the prompts.
If your debt is older than seven years.
If you have bad credit whereas the first payment default (and the last payment you made) is older than 7 years, the Fair Credit Reporting Act says it must be removed from your report – by law. I personally researched the statutes (I am not a lawyer nor a credit restoration agency) and I created this letter to write to the bureaus to clean up my own credit report:
CREDIT BUREAU NAME
CREDIT BUREAU PO BOX
CREDIT BUREAU CITY, STATE AND ZIP
YOUR CITY, STATE AND ZIP
YOUR SOCIAL SECURITY NUMBER
Dear CREDIT BUREAU NAME,
Pursuant to the Fair Credit Reporting Act [15 USC 1681] Section 605 (a) (4) ; 605 (c) (1) and 605 (c) (2), the requirements relating to information excluded from consumer reports must be followed by the credit reporting agencies. In my report, there are a number of delinquencies that are still reporting which antedate the report by more than seven years, as evidenced by the creditor self-reported date of first delinquency. It is your obligation to delete the negative items, as follows:
NAME OF CREDITOR – account number. DATE was the last activity on the account, making this account older than seven years. Please remove.
Do this for each account that is older than seven years. Be aware that while you dispute items, you will not be able to secure a mortgage as all disputes must be closed before we pull your credit.
For Experian, the address is P.O.Box 2002 Allen, TX 75013
For Equifax, the address is P.O. Box 740241 Atlanta, GA 30374
For Transunion, the address is P.O. Box 1000 Chester, PA 19022
Get a copy of your credit report, see what is bad, get the address from the bureaus, and mail them a letter.
If you have collections:
This paragraph works really well with medical collections from hospitals or any collection where you have not signed anything. In the same letter format as outlined above, add to the above letter the collection account information with the following:
NAME OF COLLECTION AGENCY account number ACCOUNT NUMBER. This collection is not valid. Please provide documentation with my signature indicating that I have contracted or agreed for this company to perform any services for me.
On the other hand, if you have a small collection from a service provider (like a cell phone or cable bill), you can call them and apologizing profusely say that you were not aware that you owed them money, and to please delete the collection from your credit report upon you making a full payment for your “had no idea” debt. The key word is deletion from your score. If this collection is within the last 12 months, it will increase your score significantly (after the deletion). Within 4 years it will increase it as well.
Understanding how the credit score works so you know how you can improve it.
You could manipulate your credit score if you knew how your score is scored. Then use the information to make adjustments, so you can buy or refinance a home and have a lesser monthly payment. Although I don’t do credit restoration, I spent a considerable amount of time researching the project for my clients, and this is what I have found.
Your credit score is largely impacted by five factors:
• 35% of the score is Payment History. Perfect score is 297.5 points.
• 30% Amounts Owed. Perfect score is 255 points.
• 15% Length of Credit History. Perfect score is 127.5 points.
• 10% Types of Credit In Use (Credit Mix). Perfect score is 85 points.
• 10% New Credit. Perfect score is 85 points.
A perfect overall score is 850, the lowest is 300. Most of the time, the minimum score you need to buy a house is 620. If you are less than 620, by making some adjustments on your credit you could reach the 620 score as fast as two weeks if your lender does a “rapid rescore”. The best interest rate is obtained with a score of 720 and above.
A good way to find out how many points your score would go up if you were going to work on it is to ask your lender if he has a “what if credit score simulator”. This eliminates the guess of how many points would your score go up if you pay this or do that.
Alternatively, you can intelligently “guess” how much it could improve on your own if you know your score. After you understand how your score is computed, I will tell you the simple formula that it may give you an idea of how much it could improve.
Payment History – 35%
This category represents 35% of your score and includes the amount of credit you have used, your borrowing and repayment habits, and if creditors have had to resort to using collections agencies or the legal system in an attempt to get you to repay your debts.
When considering whether or not to lend you money, the primary goal of a potential lender is to determine what the odds are that you will not repay the debt. Your payment history is one of the primary indicators that they have of you whether or not you’ll repay your debt. The assumption is that you will continue to pay in the future as you have paid in the past.
Do not pay anything more than 29 days late.
30 days late or more in the past 12 months are the most damaging to your score.
It pays off to hire a credit restoration company to remove negative reporting.
Account Balances – 30%
This category considers both your installment loans (e.g. a mortgage or car loan) and your revolving accounts (e.g. credit cards, lines of credit). However, your revolving balances typically cause this category to fluctuate (positively and negatively) more than your installment accounts.
It is how much you owe compared to the credit card’s limit. If you have a $5,000.00 limit card and you owe $2,500, your utilization ratio is 50%. Add up all your limits on all your balances and divide your total balance by your total limit, and that’s your overall debt-to-limit ratio. The lower the overall ratio, the better the score. The maximum score you could have in this category is 255 (30% of 850) having all accounts with zero balances considering two types of utilization ratios:
1) your overall utilization ratio (discussed above) and
2) your individual utilization ratio (per each account)
• If you can’t pay down the debt, ask for higher credit limits from your credit card companies. Higher limits equal better debt-to-credit-limit ratios.
• Become an authorized user in someone else’s account positive credit card account (with their permission). This will allow the additional available credit to appear on your report and lower your overall utilization ratio–which could lead to score improvement.
• Pay down any cards that are over-the-limit until they are within the limit. This should help you avoid additional over-the-limit fees too.
• Pay down your balances so that no debt’s “utilization ratio” is higher than 50% – ever.
Once below 50%, start paying cards completely off one at a time. Don’t close them once they’re paid – ever.
• If financially possible, pay off your credit card balances to zero monthly. Alternatively, to less than 20%.
Credit Length – 15%
The “Length of Credit” category analyzes how long your credit accounts have been open. Typically, the longer your credit history, the better your score will be. The maximum score you could have in this category is 127.5 (15% of 850). For you to have the perfect score you need 30 years of history – 4.25 points per year you have had an account open.
A good idea would be to become an additional card holder on someone else’s positive credit card account (with their permission). This will in turn allow that positive credit to report on your credit report as well. So if you have zero credit history and your friend’s card was opened ten years ago, you may then automatically see ten years of positive credit history added to your credit bureau report very quickly (automatically raised by 42 points).
Negative history will count against your credit score all the same. Moreover, if he or she maxes out the card, this will negatively affect your credit score as well. Remember that you always have the right to be removed as an authorized user should the account turn negative.
To positively influence your credit score, the accounts you add must reflect an excellent credit history, have very low balances (less than 20% of the credit limit), and, ideally, should have a positive credit history of at least two years.
Credit Mix – 10%
“Credit Mix” category represents 10% of your score. Interestingly, if your credit portfolio includes unsecured credit lines from a Bank (other than credit cards) like personal signature loans, the scoring model may consider you a higher credit risk. These type of accounts are most often acquired by consumers who can’t manage their other credit accounts without them. Unfair as it may seem, the FICO® score model may penalize those who apply for and obtain this type of credit.
Additionally, if you only have credit cards, gas cards, or store card accounts (revolving accounts), and have no record of repaying an automobile or mortgage account (installment account) over a period of years, your score may also be negatively impacted.
New Inquiries – 10%
The “New Credit” accounts for 10% of your credit score. This category is impacted by the number of times you apply for credit. Most scoring models consider consumers that open or apply for new credit accounts in a short period of time as a higher risk. Every time a credit grantor (e.g. car dealership, bank, credit card) looks at your credit file, a hard inquiry appears on at least one of your credit bureau reports. These hard inquiries remain on your report for two years, however they only impact your score for the first year.
Most scoring models will also account for rate-shopping. Basically this means that any mortgage, auto, and student loan related inquiries within a 14 day period are only counted as one inquiry. This way you are not penalized for looking for the best rate on one loan. Keep in mind this only accounts for mortgage, automobile, and student loan installment loans; not credit cards or other revolving accounts.
In addition, if you find a loan within 30 days, the inquiries won’t affect your score while you’re rate shopping.
The score counts those inquiries as just one inquiry when determining your score.
How do you build credit with no credit?
You can start with a secured credit card, which requires a deposit as collateral to secure the card’s line of credit. Secured cards, because they require you to deposit money, are easier to obtain than a regular unsecured credit card. You need to check that the secured card’s issuer reports account activity to the three major credit bureaus (Experian, Equifax and TransUnion).
Then, you should use that secured card for small purchases and pay off the entire balance each month. The credit bureau doesn’t care how much you’re paying. They just want to see those on-time payments and that your history is being built up.
Closing Accounts. While you might consider closing an unused or unwanted credit card to be a smart financial decision, because of the way your utilization ratio is calculated, the FICO score doesn’t always see it that way.
Say you have a 20-year-old credit card and a 5-year-old credit card and no other loans. That means your credit history, in FICO’s eyes, is 20 years long. However, when you cancel the oldest card and it eventually falls off your credit report (in either 10 years or 7 years, depending on your circumstances) that card will no longer be counted in your credit history. You will have basically trimmed your credit history by 15 years, the difference between the ages of the cards, and that can have an impact on your credit score.
Closing an account can have a more immediate impact on the borrower’s utilization ratio – the amount you owe
compared to your credit limit – which could also hurt their FICO score. When considering length of credit history, choose to close carefully.”Always go with a high interest account you haven’t had for too long,”
As an example, imagine you have two credit cards, each with a $500 credit limit, for total available credit of $1,000. One of the cards hasn’t been used for a while and has a zero balance, while the other card has a balance of $250. That gives you a utilization ratio of 25 percent — your $250 balance divided by your total $1,000 credit limit. You then close that unused card, eliminating the $500 credit limit associated with that account. Now, you’ve only got $500 in total credit available on that one card, but you still have $250 in debt.
Suddenly, your credit utilization ratio has jumped to 50 percent. If you max out a credit card account by using up an entire line of credit, expect your FICO score to drop by 10 to 45 points.
Just how much damage does a hard inquiry do? For most people, it amounts to a loss of fewer than five points.
But it can vary. Inquiries can have a greater impact for someone with a short credit history and few accounts than for someone with a long history and wide range of credit experience.