Credit Info And Mortgages

mortgage credit reports

Are you and your spouse thinking of buying a house? Do you know what your credit scores are? Furthermore, do you know you're entitled to get your free credit scores online through each of the three reporting bureaus; Equifax, TransUnion and Experian? The meaning of credit scores can be convoluted to many Americans, but the first thing you need to look at, before looking at houses, is your number. If your score is over 700, then you'll qualify for the best mortgage interest rates. If your rate is less than 600, then forget about qualifying for a loan at all, given the new lending standards! Knowing your credit info before you start looking is critical to avoiding the embarrassment and disappointment of finding your dream house, but being unable to gain financing.

Once you know your credit scores, you can work out any blemishes before home shopping. This should be done six months to a year before you plan on buying. If you have a score higher than 700, you needn't worry. If you're in the 500s or 600s, then try to pull your score up 100 points to get the best mortgage interest rates. There are five ways you can do this in six months time. First, you can reduce your credit card balances down to 30% of their credit limits.

Secondly, you can cut your credit cards in half, but don't cancel your account because you'll lose points and increase the amount of available credit you're using up. Thirdly, it can boost your credit score to mix up your credit portfolio. A healthy portfolio may include three unsecured credit cards, as well as a form of secured credit, which is like a student loan, auto loan, home equity loan or installment loan. Lastly, you can negotiate with all of your creditors to remove late payments, which can improve your credit overnight.

Once you've assessed and worked on your credit info listed on your mortgage credit reports, you can look at being pre-approved for a mortgage so there are no nasty surprises later. "If a buyer comes to me first, I'll refer them to a mortgage company before we even start looking for a house," explains realtor Tanikia Meeks. "That way, you become approved for a certain amount and a certain interest rate, and I know where we stand and what kind of house we can look for." Shop around for your mortgage and look at two or three reputable, name-brand lenders, like banks or credit unions. Compare fees, total payments, taxes and insurance. Generally, you'll want a 30-year fixed rate mortgage, yet if you can pay it off quicker, then do so!

In addition to neglecting to check out their credit info, there are several other common mistakes prospective homeowners make. Be sure you shop around for housing and tax prices in your area and know what you can reasonably afford each month. Avoid pre-qualifying and focus on being pre-approved because this can improve your negotiating power with sellers. Look out for pre-payment fees and other hidden costs. Be sure you have enough saved to cover closing costs ($3,300 on average) and a home inspection, which could cost $200-$400. When you're looking to start a new life, be sure it's on stable ground!