February 21

How Long to ‘Home Ready’

Education

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Editor’s Note: please consider reading this article before proceeding

“How long will it take before I can buy a house?”

It is, by far, our most commonly asked question.  

It’s what our people–you, reading this now–want to know.

The problem, of course, comes in the answering.  There is no easy way to predict what that will mean.  There are too many moving parts.  Too many unanswered questions and too many–far too many–factors outside of our control.  

Yet–still–you ask.

And why wouldn’t you?

So today we are going to try to answer.  How long will it take you to become qualified for a mortgage so that you can buy that home you’ve been dreaming of for most of your life? 

Your home.  

 

All The Disclaimers

When our credit specialists attempt to answer this question, their first inclination is to heavily qualify:

  • “I don’t know your particular situation, but…”
  • “It depends on a lot of different things, but…” 
  • “Anything could happen so we really can’t say…”

You get the idea.  And there is a lot of truth in that.  There are many ways in which this process can get dragged out, and for a small percentage of people, it can legitimately take years to get where they are trying to go.  So that is important to understand, and we aren’t in a position to predict whether that will be you or not on Day 1.  

Still, it’s possible to give some guidelines that will help our average customer navigate this process with heightened confidence and clearer expectations.  And that is what we aim to accomplish in this article.  

 

Defining “Home Ready”

So if we want to answer the question “How Long to Home Ready?” we first must clear up what, exactly, is “Home Ready?” (for an in-depth explanation click here

Home Ready is our standard for what mortgage companies will generally accept in a borrower’s credit profile.  The mortgage industry has a basic set of standards that apply when underwriting potential home loans.  These include parameters for FICO scores, debt-to-income (DTI), payment history, and documentation of income/taxes.  These are fairly commonly understood by our members.  

What is less well understood is that each lender has its own set of guidelines that they apply on top of the industry standards.  These can change whether or not you qualify when applying for a home loan.  Lenders call these guidelines overlays, and they can be really confusing for potential borrowers.  You might, for example, go into a mortgage office with a FICO score of 640 and DTI of 30/42 only to have your application rejected because that particular lender requires a higher FICO and lower DTI on a home with only a 3.5% down payment.  Yet the lender across the street would happily underwrite the same borrower for the same loan.  

If that’s confusing to you, you are not alone.  

At CIG our goal is to help members get from wherever they are all the way to the closing table.  That’s what we mean by Home Ready.  It’s not just about high enough FICO scores, although those are very important.  It’s about an entire credit profile that is creditworthy AND connecting you with the right lender for you and your specific situation. 

That’s what it means to be Home Ready at CIG.   

 

Finding Your Lender

So, when we are trying to answer the question of “How Long,” it’s important to understand that Home Ready means actually connected with a lender partner.  CIG maintains an extensive network of relationships with lenders all over the United States.  This gives us a lot of options based on the needs of the individual customer.  Part of our process includes identifying which lender is right for which customer.  Without this piece of the puzzle, so many people end up getting lost in limbo where they are being rejected by lenders and don’t know what to do to get approved.  

This is why the most important day in your CIG credit map is the day we send you out to a mortgage partner.  And this is the day we measure ourselves by.  It’s important to understand this when we are quoting timelines.  Home Ready = connected to a lender.  

 

Reaching The Home Ready Desk 

Alright, so how long DOES it take to become Home Ready at CIG?  During the calendar year of 2021, CIG sent hundreds of members out to lenders.  The average time on these specific members is what we want to focus on.  These are our people who came in and worked hard at their Home Ready Map.  They gave every effort to follow the steps we provided and had success!  That means paying down or paying off credit cards, getting current on installment accounts, providing rental history from their landlord, re-working student debt, and lots of other things besides.  

That takes time.  

How much time? 

Glad you asked 😉 

Before you can get into the Home Ready Desk, you are required to successfully meet the baseline requirements.  You can do this by filling out the Home Ready Questionnaire.  This is a series of questions that ensure you are ready to start fine-tuning your profile in preparation for going out to a lender.  So you’ll need to have improved your score above 640, for example, and met minimum standards for DTI, payment history, and a number of other factors.  It took our average customer 143 days to reach this step in the process.  That’s about 5 months.  

Keep in mind that this is an average number!  So it’s possible to do it much quicker or for it to take much longer.  We had a few members who had particularly difficult situations who took well over a year to reach this step in the process.  Meanwhile, we have a significant number of members who make it through in the first and second months after signing up with CIG.  

The single biggest factor is how hard you work the process.  Members that commit and do everything in their power to be successful tend to get there much quicker.  

But there are some problems that are more difficult to address than others, and that can prolong the process.  For members who choose our Platinum Services, your Personal Credit Profile Specialist will walk you through all of this in-depth once you get to that point in the process.

 

Home Ready & Finding Your Lender 

The last part of the process is to get you connected to a lender, broker, or bank that is right for you.  Many members come to us with a lender relationship already in place.  In these cases–once they are certified Home Ready–we simply send that customer right back to their lender gift wrapped and ready to go house shopping.  For those who do not already have a lender relationship, we evaluate their profile and present them with a shortlist of lender recommendations.  This way we make sure they get a loan officer that can help them with their unique needs and challenges.  

How long does this part take?  

The first leg of the journey is actually the most difficult.  Reaching the Home Ready Desk in most instances requires you to achieve a minimum FICO score of 640, and that is the single most time-consuming part of the process.  Once you actually make it to the Home Ready Desk, however, things usually start to move much faster.  

In 2021 the average CIG member took 58 days from the day they entered the Home Ready Desk to the day they were connected with a lender.  That’s just a little less than two months.  In this step of the process we comb through your profile to make sure you don’t have any red flags that could stop you from being approved by a lender, we assess your debt-to-income and generally do a final pass to make sure that there aren’t any details that might hold you back once you’re sent out to your loan officer.  

Once you have checked all the boxes, we schedule a call and connect you with the chosen lender.  This is one of the most exciting days for us and our members: when we get to see all the hard work pay off and the dream starts to become a reality.  

 

How It Will Happen For You

The best part about Home Ready is that it can genuinely happen for anyone.  It is the result of specific steps taken–steps that we know and can guide you to take.  If you work the process, you can get there.  

The tough part is that there is a lot of uncertainty.  So it takes commitment and follow-through.

What we want to do in this article is help you understand some of the moving parts that can affect your specific timeline.  Included below is a graph that shows how quickly our members move through the process, become Home Ready, and get connected with a lender.  You’ll see that many of our members make it through within the first couple of months.  You will also see that a significant number take more than a full year to get through.


What are the most common things that can land you in the last group?  Bankruptcies, foreclosures, high numbers of late payments, and tax filings can trigger wait times. If you have one or more of those on your profile, you can go in expecting it to take longer than average.  But!  Any one of those things is not automatically going to take forever.  CIG has been able to work with even the worst profiles to get them back on track and Home Ready.  We just can’t predict what it will look like until we go to work for you.  

At the most basic level, there is a portion of this that is simply a leap of faith.  

We know that is hard.  

And we invite you to take it with us.  

Author 

Credit Innovation Group

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