1. Have your credit checked early in the process. Most people do not know their credit scores or what really determines a good credit score. It is not enough to get a free credit report from a single credit reporting agency. It is important that you have a mortgage planner obtain a tri merge report. This will provide scores from all 3 reporting agencies. Typically the lender will take the middle of the three scores when qualifying an applicant. It's important to determine if there are credit issues early on. Many times they can be corrected in a matter of weeks and will raise your score. A low credit score can cost you many thousands of dollars in mortgage interest.
2. Be careful not to make any new purchases on credit. As the prospect of buying your new home comes closer you will begin to think of all the new needs you'll have. Perhaps it's larger so you'll need new furniture. Maybe new appliances or even how a new car will look in the driveway. Don't laugh, if it hadn't been done by my past clients then I wouldn't have mentioned it. Do NOT accumulate new debt before you close on your new home. New debt lowers credit scores and will throw off the debt to income ratio that you were qualified with.
3. Know your Mortgage Planners experience and ability. It is vital to have someone with experience handling the largest purchase of your life. Sometimes people will have a friend or relative that's in the "business". Often this is an inexperienced person trying to earn part time income. It is important to have an experienced Mortgage Planner on your side to consult, negotiate and oversee the details of your transaction. Find out what credentials they have. Are they licensed? Do they have a certification in the particular loan programs you are interested in. How long have they worked full time in the industry? Your Mortgage Planner will be responsible for your largest purchase – make sure that you have confidence in that.
4. Thinking there are only 1 or 2 Loan Options. Many buyers assume that there are only a couple loan options available to them. Perhaps they are told by a bank that they need 10% – 20% as a down payment and so assume that they must continue renting until that have that money saved. Make sure that you speak to an experienced Mortgage Planner to determine ALL your options. Today, there are dozens of home loans available. Some that require no down payment at all.
5. Be aware of how subtle changes will affect your score. Show caution in having your credit checked. It is important to have it done by your Mortgage Planner for pre-approval but after that be careful. Lenders will view multiple credit checks as a sign that you are trying to obtain credit and will subsequently lower your score. Never close a credit account prior to obtaining your mortgage approval as this will lower scores also.
6. Do not Purposely leave out important credit details. Your Mortgage Planner is on your side. Past credit problems may be embarrassing but they will show up somewhere down the road. Be sure to explain everything so you can have a plan of action ot overcome it. Give them the information so they can provide you with the best possible interest rate and service.
7. Get a Mortgage Pre-Approval. Preapproval is a necessary ingredient in negotiating the best deal possible with the seller. A seller will want to see your approval certificate to know that you are negotiating in good faith. It is simple to do and free. It is done over the phone and will give you a greater sense of freedom as you shop for a home.