When you are looking at buying a home, whether your first or fifth home, you will need to get financing to help you buy your home. Here are some tips to help you prepare and improve your credit, when necessary, and to find a home financing program for your situation.
Improve Your Credit
If your credit is not the best, there are some things you can do to improve it over the next few months. First, you will want to get a copy of your credit report from one of the three credit bureaus, Experian, Equifax, and TransUnion. Each of the three main credit bureaus will give you a free copy of your report each year, so you don't need to pay for this information.
Review the information to make sure there are no errors, such as inaccurate payment information or an erroneously-reported delinquency on an account. If there are any errors, dispute them with the credit company, who will investigate to correct them for you. This can be completed right on their website through your report. The credit bureaus usually make updates to your credit report once every 30 days, so it can take some time to resolve any issues.
Next, you can pay down any credit cards you have in your name, as having too much of this type of revolving debt can lower your credit score. A mortgage underwriter will consider an open and unused credit card as potential debt, which will lower your credit score. So close any unused accounts to help raise your credit score.
Talk To a Mortgage Broker
To begin the search to acquire financing for your home, it can be more beneficial to talk to an independent mortgage broker versus a bank mortgage broker. An independent broker will have access to a wide variety of financing programs from traditional bank financing to government funding programs, which will give you a better chance at a good interest rate mortgage. A bank mortgage broker only has access to the specific loans offered by that bank and may not be able to find the best and most optimal program to benefit you.
Your mortgage broker will look at your income and your credit to see where you stand in terms of getting approval for a low rate program. They can advise you on how much you should budget for your new mortgage payment and the other expenses with buying a new home, such as applicable mortgage insurance, home owner's insurance, and property taxes.
For more information, contact local professionals like those found at Robert McNall with RE/MAX Elite Team.