It’s a GREAT time to buy a home! Mortgage rates are still low. Homes in many areas are still affordable for many families and the inventory of homes for sale is better now than one year ago, giving home buyers more choices. But as with just about anything in life, preparation is key. If you’re thinking about buying a home, here are a few things you’ll want to do before you visit with a mortgage lender and begin your home search:
Order your credit report. Under federal law, you are entitled to one free credit report each year from all three credit-reporting bureaus: Experian, Equifax and Trans Union. Simply go to Annualcreditreport.com to request your free copy, which you can access within minutes online or elect to have it mailed to you. Your credit report details your payment history – the good and the bad. Mortgage lenders use credit scores, along with your income, to help determine not only whether you qualify for a home loan but how much home you can afford. Be sure to check for any errors in your credit report and report any inaccuracies. Contact each bureau to get any errors fixed as soon as possible.
Order your credit score. The next thing you’ll want to to do is obtain your credit score, the three-digit number representing the quality of your credit record. When you order your score, you will be given specific tips on how to improve it. Consider this your action plan; these are the things that will help you improve your score the most. You can order your score from any of the credit-reporting bureaus, or from credit-scoring company Fair Issac.
Avoid piling on the debt. Now’s not the time to purchase new furniture for the entire house or purchase an expensive recreational vehicle or travel trailer. The goal is to keep the amount of your available credit that you use as low as possible in relation to your overall credit limits while you qualify for a home loan. Once you are approved for a home loan, you’ll want to avoid any big purchases during the underwriting process.
Make payments on time. Making payments on time can have a big effect on your credit score. In fact, the last two years’ worth of payment history is a big factor in your ability to qualify for the lowest mortgage rate possible. This is a good time to be especially vigilant about paying bills on time.