Buying a home is exciting. It’s also one of the most important financial decisions you’ll make. Choosing a mortgage to pay for your new home is just as important as choosing the right home. You have the right to control the process. Research shows that people who plan carefully for big purchases, like owning a home, are less likely to run into financial trouble later. So if you are thinking about buying a home this year, let’s make a plan.
The first step: Check your credit.
It’s always a good idea to review your credit reports and scores periodically, even if you’re years away from shopping for a home and a mortgage. If you’re planning to buy a home this year, we recommend checking your credit reports and scores as soon as possible.
The better your credit history, the more likely you are to receive a good interest rate on your mortgage loan. Lenders will use your credit reports and scores as important factors in determining whether you qualify for a loan, and what interest rate to offer you. If there are errors on your credit report, you may have trouble qualifying for a loan. So, don’t delay in checking your credit. Review your credit reports and take steps to fix any errors.
It’s the first step to building a strong financial foundation for your new home.
Don’t apply for any more credit than you absolutely need. If you can, avoid applying for new accounts or adding significantly to your debt. Your credit score may decline if you have too many new account requests or too much new debt. However, when you request your own credit report, those requests will not hurt your score. And when you shop for a mortgage with multiple lenders, the additional credit checks won’t hurt your credit so long as they happen within a short window of time, roughly 45 days.
Remember that everyone, regardless of credit score, has the right to shop around for the best mortgage for their financial situation. Checking your credit history, fixing any errors, and knowing your credit scores will put you in the best possible shape for getting a mortgage.