There are many tools that new home buyers can use to prepare to become a homeowner, which were not available even a few years ago. On the Internet, new home buyers can access home loan calculators, tax appraisals, pre-qualification opportunities, and constant credit monitoring. Some new home buyers may not realize that the last item – credit monitoring – is one of the most important factors that lenders use to determine eligibility for a new home loan. Staying on top of your credit right before you are about to buy a home is the most important thing you will need to do unless you are planning on being able to purchase a new home for sale with cash.
If you have the availability, sign up for a free credit monitoring agency which will not only be able to constantly inform you about your credit report, but it will also alert you if there are any changes to your credit report. You are
going to want to know exactly where you stand with your credit when you go to apply for a loan.
If you check your credit report, and you see items on it that you don’t recognize, be sure to immediately report those errors to the credit agencies so that they can be removed. Any good credit monitoring company will have information where you can dispute items on any of the three credit agencies’ reports. You will need to have as clean a credit report as you can when applying for a home loan.
Finally, if there are legitimate items on your credit report which need to be addressed or paid, you will want to be sure to take care of those before applying for a loan. Some banks won’t approve you for a loan with derogatory marks on your credit report. Others will give you a loan, but it will be for a higher interest rate than you would have gotten with a better credit rating.
Credit is the biggest factor in getting a home loan, but don’t forget that you will need to have enough income to qualify for a home loan. Make sure you know how much you qualify for before going out to search for a house, so that you don’t go out of your price range during your search.