If you have a goal of living in a new home this year, you're not necessarily dreaming the impossiable dream.
However, you may have to do a little planning and have a little patience and restraint.
A loan officer may frown at those credit card bills on your desk or the new car you bought as a birthday gift to yourself.
Experts reportedly suggest your first action toward your goal of homeownership is to be timely about paying bills.
Credit history can have a tremendous impact on the success of an application.
Over the months leading up to the filing of your mortgage application, make loan and other debt payments on time.
The credit score the lender will use as part of the loan file can be reduced if you have a 30-, 60- or 90-day delinquency on a credit card or loan.
This score can help determine whether you receive a loan, and if you do, how good a loan it will be.
If you think that you will have many financial obligations in the near future, get the mortgage first.
A borrower's credit score can be damaged by many credit inquiries, such as those for new applications for credit cards.
This is true especially if they are filed around the time of the home loan review process.
Save as often as possible, to increase the size of your down payment.
Think about putting your savings into money markets or other accounts that offer reasonable rates of return instead of putting the savings into something possibly unstable, like an individual stock.
Avoid making large purchases in the few months before you plan to buy.
You don't want to need still another loan.
A $15,000 car loan will make a poor impression on mortgage lenders' scoring systems.
Experts suggest that you should want your debt obligation to be no higher than 36 percent of your gross monthly income.
If you're unsure as a potential home buyer what your mortgage payment will be, and you think you're in the range of surpassing that 36 percent requirement, you need to avoid increasing your debt.
Don't forget the power of prepproval versus prequalification.
With prequalification, a borrower receives an estimate on the maximum mortgage and home that is affordable.
All that is required for prequalification is for the borrower to voluntarily offer credit, income and debt information to a lender or mortgage broker.
However, home buyers who are preapproved must first allow their lenders to check debt-to-income ratios and perform other underwriting steps.
As a result, they can inch closer to actually obtaining a loan and locking in a rate and term.
If you have any questions about the purchase or sale of a home, give me a call!
