Jacksonville is a wonderful place. You’ve been renting for a while now and it feels like the timing is right to make the leap to homeownership. Maybe your friends are all buying houses and your job feels pretty stable, how many more hints that it’s time to settle down could you really need?
Well, if you’ve given it considerable thought, and you have a realistic expectation of what you can afford, then full speed ahead. Buying a house is a challenging experience, only made significantly worse by credit mistakes.
So here are the top credit mistakes to avoid when buying a home.
Not knowing what’s in your credit file to begin with. The last thing you need is a bit of a surprise when you go to apply for a mortgage. If you have collections that you’re unaware of, judgements that were never served to you or just plain bad information in your file, it is best to handle these items on the front end. It can take a while to completely erase the effects of any negative information in your credit file, so you need to get started right away.
CreditKarma.com (Transunion and Equifax) and freecreditreport.com (Experian) will allow you to check your reports for free for any issues. Check it line by line for accuracy and contact any collection agents that may be listed so you can work out a payment plan on that cable bill you left behind in your college apartment and totally forget to pay.
Applying for mortgages over a long period of time. When you are definitely ready to buy, do all your mortgage shopping within a 14 to 45-day window (depending on the scoring model and version). Ask your lender how long credit inquiries for mortgages will remain grouped, only being counted as a single credit pull. Otherwise, so many hard pulls will ensure that you don’t move forward to purchase.
Opening new lines of credit in anticipation of closing. First, it’s a hard pull on your credit, which will reduce your score slightly. Secondly, if you use that credit line, your debt to income will increase. Your credit score, debt to income ratio and possibly your credit utilization will take a big hit and your loan may be cancelled at the last minute when underwriting is re-verifying your application. We have seen this happen way to often. So wait to buy that furniture until after your mortgage loan closes.
Maxing out existing credit lines. Moving is expensive, even if you’re just moving across town. The moving truck alone can cost hundreds of dollars, and that’s if you do the job yourself. There’s nothing wrong with renting a truck, hiring a mover or even hiring a whole lot of movers, just do it after closing. If anything changes to the negative about your credit score, credit utilization and your debt to income ratio, as stated above, your loan can be cancelled. This is not a drill!
Failing to forward your bills. After closing, you could still make a few credit mistakes problems related to your move. Did you remember to pay the last utility bill at your old place? How about the broadband? It may seem like an obvious error to avoid, but when you’re in that moving stress haze, sometimes it’s all you can do to grab a pot of coffee and get moving again. Your credit is pretty good right now, don’t forget to pay those final bills.
Buying a house with a mortgage can feel like an exercise in paperwork collection, but the truth is that all of it is necessary for you to get the very best price from your lender. After all, what they’re really doing is trying to ensure your success with their loan. When you succeed, they succeed.
Author:Darren Pearson Phone: 904-517-7108 Dated: February 8th 2019 Views: 164 About Darren: Darren married his high school sweetheart, Julie, and they live in Southbank right on the St. Johns ...
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