Right now is an exciting time to be in the market to purchase a home. Not only are home values very reasonable but mortgage rates are near historic lows which means that right now is the most affordable time to get the most house for your dollar.
However, qualifying for a home loan is not as easy as it used to be since the housing market has crashed. Mortgage lenders are asking for more documentation and higher credit standards before they are willing to lend you hundreds of thousands of dollars to purchase a home.
Industry experts recommend giving yourself plenty of time to prepare for purchasing a home, starting with your credit. Your credit score is the number one determining factor to whether you will be approved or denied a home loan.
The two biggest problems I see with first time home buyers credit is that 90 percent of the credit reports have misreporting information and high balances on revolving credit. Both of these problems can be fixed pretty easily and depending on your situation and available cash, can be resolved in as little as a week.
Did you know that your credit card balances make up 30 percent of your credit score? If you were able to drop the limit to what you owe on your credit cards to 30 percent of the available limit or less you could see a significant increase in your credit score and you will be able to qualify for better rates and terms on the purchase of a home.
Once your credit is under control you should obtain a pre-approval letter from a reputable mortgage lender before you begin to drive all around town looking at homes. In order to obtain a pre-approval letter, your lender will need to verify your credit, income and assets to determine exactly what you qualify for.
When your lender hands you that pre-approval letter, you are now considered a cash buyer and are able to freely submit an offer on any home that fits into your qualifications.
Guest blog provided by:
Jeremy Redlinger (NMLS #627335)
Midwest Mortgage Capital10900 73rd Ave N #150 Maple Grove, MN 55369 (763)957-0858