Buying a house is very important and a very big step in our lives. Many of us save up for years to be ready when the time comes to purchase our dream home without realizing that once we apply for a mortgage loan we may be denied for various reasons. Here are are things you want to make sure you do before you even attempt to apply for a mortgage loan.
The very first thing you should do is check your credit score and credit report. You need at least a 620 to qualify for a mortgage loan, but remember, your credit score is only ONE factor in qualifying. I personally would check this information at least 8 months before actually applying to give myself enough time to work on anything that needs work. Keep in mind a mortgage loan is typically the largest loan you will ever get you your lifetime. If you have any late payments or collection accounts, it’s a good idea to seek help to help you remove those accounts from your credit report to decrease your debt as well as help your credit score.
Second thing you want to do is avoid making large purchases and stop applying for new credit as well. Every single time you run your credit it lowers your credit score an average of 2-5 points, sometimes more. Make large purchases before applying for you mortgage loan may greatly impact your debt-to-income ratio, ultimately affecting your chances for approval.
Last thing you want to do is pay off as much debt as possible, meaning you want to pay off your credit cards and lower the balances. Lowering the balances will also help your debt-to-income ratios and may also help increase your credit score as well as portion of your credit score accounts for 30% of your entire credit score. With that being said, you also want to ensure you make all of your payments on time, your payment history accounts for 35% of your entire credit score, late payments will quickly damage your credit score and may also be the reason why you don’t get qualified for your mortgage loan.
If you’re thinking of applying for a mortgage loan in the near future, we can help you with all of these things. We can review your credit report with you, see the areas you need to improve and ultimately help you get the highest score we can possibly get you with the least amount of negative marks on your credit report not only increasing your approval rates but also help qualify for lower interest rates. Even with a 620, you may still be looking at paying double the amount for your home in just interest. Taking the time to work on your credit first, you can truly save yourself over $100,000 in interest in the span of 30 years!
A Goal without a Plan is just a Wish. Give us a call TODAY at 844-FIX-URCR or click on the following link creditservicesofamerica.com to schedule your FREE consultation and create your personalize plan to achieve your credit and debt GOALS!
*Individual results may vary. Please call for more details and to discuss your own individual situation.