Residential Mortgage Credit Report

If you are thinking about buying a home, you should know there are a lot of things involved in the process, including a residential mortgage credit report. You may also see this abbreviated as RMCR. This is a bit different than your average credit report because it is more extensive in nature. It is supplemental to your regular credit report because it provides information about items on your report flagged by the three major credit bureaus -- Equifax, Experian and Trans Union. The majority of mortgage lenders are going to pull this report. It verifies information such as your place of residence, employment and credit scores and make sure they meet or exceed guidelines for loan programs such as VA programs, FHA programs and those by agencies like Freddie Mac and Fannie Mae.

The RMCR is just one aspect of your mortgage application. Your regular credit report will also be run and analyzed by the mortgage lender and compared with the RMCR to create a detailed picture. You will also need to provide proof of income, as well as debts and expenses so the ratio of earnings to expenses can be analyzed. If you are a first time homebuyer, there are various programs that are especially for you. There are also programs for those who want to buy homes and/or farms in rural areas, and even special programs for active or retired military personnel.

The combination of all this information is used by the loan officer to approve or deny your mortgage application. If approved, the information is used to determine your interest rates. The better your personal credit report and residential mortgage credit report are, the lower your interest will be. There are two basic types of mortgages -- adjustable rate and fixed. An adjustable rate mortgage, or ARM, is popular with first time homebuyers because the initial starting rate is often lower than what is offered as a fixed rate. While ARMs can fluctuate based on market conditions, fixed rate mortgages stay the same.

If you start off with an adjustable rate mortgage and find in the future that the market has turned in your favor or your credit has improved, you may want to refinance your mortgage loan to make it a fixed rate mortgage. Refinancing can also change the term of your loan. If you want lower monthly payments, lengthening the term can help. However if your income has gone up and you want to make higher payments so you can build equity and pay off your mortgage faster, you can refinance for a shorter term.

In some cases potential homebuyers discover their credit is not good enough to buy a home. This would be based on the information gathered by the lender who has analyzed your personal and residential mortgage credit report. A good strategy in this case would be to attend credit counseling which can help you pay off debt and rebuild good credit using smart strategies. Consumer Credit Counseling (CCC) is a nonprofit organization who can do this in addition to teaching good money management strategies.

You may want to visit a credit counselor before even applying for a mortgage, because it is wise to know what your credit score is and what is listed on your credit report. That way, you can take care of any outstanding debts, late payments and discrepancies before you even apply for a mortgage. Another good idea is to get pre-qualified. This means the lender analyzes your information and tells you how much of a mortgage you qualify for, how much of a downpayment you would need and your estimated interest rate so you can shop for a home that is within your financial means.