Buying a homecan bea stressful and confusing time formany homebuyers. Butitdoes nothave it be.Fivesimplethingsyou should do before you buy a home. One of the first things you should do when you are considering buying a home is to know your credit score.
Tip Number One:Get Your Credit Report and Scores for Free To get a home loan there are several factors that come into play, but your FICOor creditscore is the most important. You can check your credit report and get your scores online for free. The Fair Credit Reporting Act requires each of the nationwide credit reporting companies—Equifax, Experian, and TransUnion—to provide you witha free copy of your credit report, at your request, once every 12 months.Once you have your credit report be sure to review it and check for any errors.
Tip Number Two:Look for Errors on Your Credit Report Mistakes on credit reportsarebigger issuesthan you may realize. If you do find inaccuracies,you can dispute them with the three major credit bureaus. They have 30 days to investigate your dispute. If they find that the item in question isinaccurate,they will correct it.
The higher the credit score the more likely you are to get approved for a home loan, so check what you can do to improve your score.
Tip Number Three:Improve Your Score Before Applying
A few pointsdifference in your credit scorecan be the difference in whether you qualify for a home loanor not. There are a few things you can do to increase your scores.
First, pay down the balances on your credit cards.Your credit utilization ratio is your credit limit divided by your card balance. This ratio accounts for 30% of your overall creditscore, only payment history has a bigger impact. Forexample,if your credit limit is $10,000 and your balance is $6,000 your utilization ratio is 60% which isremarkably high. The lower your credit card balances are the higher your credit rating will be.Some credit experts advise keeping your balances below 20% of your credit card limit. The next thing you can do is to make all your payments on time.35% of your credit scoreisbased onyourpayment historysoit’s important to payallyour bills on time.If you’re a forgetful person you can set up auto pay with yourcreditors,so you never miss a payment.
If you are wanting to buy a home, do not apply for, or open any newcredit.This means tohold off on buying a new car or opening a credit card until after you close on your mortgage.
Tip Number Four:Check Your Savings You will need a certain amount of cash in the bank to buy a home. Ifyou areliving paycheck to paycheck then it probablyis notthe ideal time for you to apply for a loan. There are more upfront costs associated with getting a mortgage loan besides the down payment.There are closing costs and fees that you will need to pay to the appraiser, lender andtitle company, so you need to make sure you have enough cash on hand
when you get ready to close.Andone of the most important things you should do before you go out looking for a home is to get pre–approved.
Tip Number Five:Get Pre–Approved A pre–approval meansyou havecompleted a mortgage application and amortgage lender has checked credit and verified income and assets. You will need to submit documentation verifying your income, assets and savings and your lender will be able to help you through this process. Most sellers today will not even consider an offer from a buyer who has not already been pre–approved, so plan on meeting with your mortgage lender before you go shopping for your home. Buying a new home isexcitingand there are afew simple things you can do before you start looking that will help you through the process.