Getting a mortgage these days can be challenging. We hear about the issue constantly, but what can YOU do to put yourself in the best position to obtain the best mortgage? Here are some basic steps to keep your credit looking good and ensure that your financial picture doesn’t change during the mortgage application process.
Find Out What Your Credit Score is Right Now
You may have checked your credit score in the past year, but you may not be aware of changes that have posted to your credit report — either correctly or erroneously — that have affected your score. All three major credit bureaus (Equifax, Experian and TransUnion) must provide you with a free report annually, so be sure to get a copy from each. One of the easiest sites to work with is AnnualCreditReport.com.
Pay Your Bills on Time
Even one or two late payments can greatly affect your score, so be sure to stay on track with your payments and due dates. Setting up automatic payments is a great method to make sure you don’t ever miss a payment.
Income Should Be Steady and Reliable
It sounds basic enough, but it is important to understand that lenders really like to see at least two years of employment within the same field along with the supporting documentation. If you hold a commission-paying job, you may need even more time in that field to receive positive marks from lenders.
Don’t Splurge After You’re Approved
Don’t go out and buy that new boat (or car or motorcycle or any big ticket item) as soon as you get a loan approval. New loans can adversely affect your credit during the critical period from loan approval through settlement, so you should hold off on any major purchases until you’ve gone to settlement. If you absolutely must buy something, talk to your lender first.
Consider Keeping Those Old Credit Cards
A common theme among buyers is the desire to close old credit cards. That’s not necessarily the best move, so you should talk to your mortgage lender before doing so. Lenders want to see credit history and a reasonable amount of available credit. Closing cards can affect both of those.
These are just a few tips to help you buy your dream home this year. Bankrate.com offers additional mortgage and homebuying advice, and you should definitely take a look at their recent article “Anxious About Mortgage Process? Start Here.” Of course, lenders are great resources, so you’ll want to talk to them to get guidance tailored specifically for you. Happy house hunting!