Buying a House? Check Your Credit Standing First

It is real that the collapse in the sub-prime market has resulted into a damaging effect in the mortgage sector in general. It forced lenders to be more careful with their lending behaviors and those with bad credit or undocumented profits are finding it more difficult to be eligible for home loans that are available for them. But if you got a great credit standing, there is no need to worry about getting disapproved for your home loan application through mortgage.

It is crucial to take note that knowing your credit scores from three accredited credit agencies is important before you buy a home. There’s a high chance that your lender will verify your three FICO scores. Hence, you must know them before you apply for a loan. There is also the possibility that you may cite a generic credit rating that your lender is not using to figure out your credit worthiness. In order to be certain how the home lending company is evaluating you, you can inquire which credit scores he is looking at and what rating can qualify you for the best rates.

After checking your credit score and knowing where you stand based on the viewpoint of your lender, you can estimate your mortgage payments to determine if you can really afford the home that you are interested in buying. For example, if you have a FICO score of 760 or higher, you are on the safe zone. Most lending companies consider people with this score to be low-risk clients and thus provide them the best rates for repayments and interests. If I needed to fix my credit, I would look for the best service out there, as this would save me a huge amount of mortgage interest dollars.

It will help you out if you will work to get your scores on this range, before you buy a house through a mortgage loan. Improving your score could mean thousands of dollars on your annual savings.

Meanwhile, it is also true that mortgage lenders are becoming stricter in their lending practices, and individual FICO scores play a crucial role in getting the best rates for a home loan. Your credit standing can be more vital once you improve your score. Because lenders are less likely to accommodate riskier customers, people with poor credit may find it more difficult to qualify for mortgage loans. A high credit score means that lending companies will not consider you to be a risky client. As a matter of fact, only 2% of customers in the range of low-risk clients will have the possibility to reach three months past due or worse on any credit account in two years.

Make certain that you watch your credit when you apply for home financing. Bear in mind that what you do before, during and after you buy a home through mortgage can affect your financial life. That is why it is essential to check your credit rating to make sure you will have the best deal in buying a home that you want.

For highlight, be sure to remember these two points when you are searching for a home to buy:

  1. Check your FICO score from three national reporting agencies: Experian, Equifax and Transunion. This is to check if there are any discrepancies between these three agencies.
    If you believe that your credit report has errors – for example, you have spotted an unpaid item that you have already settled or a credit appeared that is not yours – you need to submit a dispute with the reporting agency.
  2. After getting your score and details for possible rates, you must consult a home mortgage expert and ask about your monthly mortgage. This is a good way to be sure that you are ready for the payments to buy your home.