Buying a home can be a mystery for some people; especially first time homebuyers. Many people get frustrated with the all the paperwork, forms, questions, and legal issues involved in purchasing a home. In addition to getting through the mountains of paperwork, is also important to understand how you can be a big help to your broker. Many first time homebuyers do not realize that the home buying process actually starts before you even take a tour of that first home. In order to make the process go a little smoother, it is important that you first go to visit your lender to get pre-qualified.
Final approval depends on whether the property also meets requirements for a loan. Different loan types have different guidelines for qualifying ratios. Your lender usually will not recommend a loan product until you complete a loan application. However, once lenders determine qualification ratios, they have a preliminary idea of which loan types to recommend, and you now have a better idea of what types of homes to look for. This also ensures that you and your broker are not wasting your time looking at properties that you are unable to purchase.
Once you have made the decision to purchase a home, it is essential that you go over your credit history with a fine toothed comb. Many of us are unaware of our credit scores, and the items that appear in the report. Often times people find that many of the items listed on their credit report are inaccurate, or should be removed. Here are a few tips to maintain good credit and ensure that you are able to go through with the purchase of your new home:
1-Pay all of your bills on time. This sounds simple, right? Well, in these uncertain economic times, it may be a little more difficult for some people to do. If you expect that you may have problems paying your bills on time, then wait until you are more financially stable to apply for a loan. Lenders want to see consistent bill payments over a substantial period of time. If you find yourself having a hard time paying bills, be sure to talk with the lender or company you owe. They may have programs or suggestions that will help you avoid having your bill sent to collections
2-Don’t open new lines of credit while you are in the process of applying for a new loan. Wait until the home buying process is over with. Opening new lines of credit will potentially reduce your credit score, and if you do this before finalizing your mortgage, you many find yourself stuck with a higher interest rate.
3-Monitor your credit report. It is absolutely essential to approach your credit reports with eyes open wide. There are many times when people realize that information reported may be inaccurate. If you find items that are reported inaccurately or do not belong to you, contact the creditors and get the situation resolved as soon as possible.
4-Reduce your credit card debt. While credit cards help establish the history of your ability to pay, they can also hurt you if you are not careful. When applying for your mortgage loan, be sure to try and pay down your debt as much as possible. The more you pay down, the more credit you have available.
The best loans and mortgages are available to borrowers with FICO scores 700 and above. Experian, one of the major credit reporting agencies, reports that the average credit score is 693. To ensure that you do not miss out on the home of your dreams, be sure to pay attention to detail and protect your credit. Contact us today to find out how you qualify for the home of your dreams.
