10 Important Things To Remember When Buying A Home
Home buyers have a nasty habit of thinking they can change the way the do things once they are in escrow on a home and are waiting for it to close. They go out and buy a new refrigerator because the sellers are taking the one in their new house. They go out and buy a new washer and dryer because there wasn’t one in the home they just bought. Beside who wants to wash clothes in someone else machine…eeeww.
Some home buyers think they will be clever and pay off a credit card. It screws them up if they do. In fact the washer and dryer mentioned above. Some home buyers may put it on their credit card because they don’t want to carry $2500 in cash around. They think they will pay the VISA bill when it comes in and all will be well. Not so, the added debt may increase your debt ratios so you won’t qualify for your loan and you will lose the house you just bought.
So heed these 10 Important Things To Remember When Buying A Home and you will be in your new home in no time at all.
Redwood City, CA 94062. Follow these Top Ten Do’s and Don’ts of credit if you are planning to apply for a real estate loan in the next 6 months:
1.DON’T CLOSE CREDIT CARD ACCOUNTS. If you close a credit card account, it will seem to FICO that your debt ratio has gone up. Also, closing a card will affect other factors in the score such as length of credit history. If you have to close a credit card account, do it after closing, and make sure that it is a more recent account.
2.DON’T APPLY FOR NEW CREDIT OF ANY KIND. This includes those “You have been pre-approved” credit card invitations that you receive in the mail. Every time you have your credit pulled by a potential creditor or lender, you lose points from your credit score immediately. Depending on the elements in your current credit report, you could lose anywhere from 2-50 points for one hard inquiry.
3. DON’T DO ANYTHING THAT WILL CAUSE A RED FLAG TO BE RAISED BY THE SCORING SYSTEM. This would include adding new accounts, co-signing on a loan, or changing your name or address with the bureaus. The less activity on your reports during the loan process, the better.
4.DON’T PAY OFF COLLECTIONS OR CHARGE OFFS DURING THE LOAN PROCESS. Paying collections will decrease your credit score immediately due to the “date of last activity” becoming recent. If you want to pay off old accounts, do it through escrow, and make sure that 1) you confirm that the debt is yours, and 2) the creditor agrees to give you a letter of deletion.
5. DON’T MAX OUT OR OVER-CHARGE ON YOUR CREDIT CARD ACCOUNTS. This is the fastest way to bring about an immediate drop of 50-100 points in your credit score. Try to keep your credit card balances below 30% of their available limit at all times during the loan process. If you decide to pay down balances, do it across the board. Meaning, make an extra payment on all of your cards at the same time.
6. DON’T CONSOLIDATE YOUR DEBT ONTO ONE OR TWO CREDIT CARDS. It seems like it would be the smart thing to do; however, when you combine all of your debt to one card, it seems that you reached your limit on that card, and the system will penalize you as mentioned above. If you want to save money on credit card interest rates, wait until after closing.
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7. DO CALL YOUR MORTGAGE PROFESSIONAL if you receive something in the mail from a creditor or collection agency that you believe may affect your score during the loan process. Your mortgage professional may be able to supply you with the resources you need to stop any derogatory reporting to the bureaus.
8. DO STAY CURRENT ON EXISTING ACCOUNTS. This includes your mortgage and car payments. One 30-day late can cost you anywhere from 30-75 points.
9. DO JOIN A CREDIT WATCH PROGRAM. If you join a credit watch program, you can check your reports weekly, or even daily depending upon the program you select. (When you pull your own reports, you don’t get dinged for a hard inquiry.) This way, if something does show up on your reports that caused your score to go down, you’ll know it immediately, and you may be able to take care of the problem before closing.
10.DO CONTINUE TO USE YOUR CREDIT AS NORMAL. Red Flags are easily raised within the scoring system. If it seems that you are changing your pattern, it will raise a red flag, and your score could go down. 10 Important Things To Remember When Buying A Home
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