How To Prepare For A Home Loan

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Need to know how to prepare for a home loan? The first step in getting ready to purchase a home is making sure that your credit is up to par; otherwise a home loan could be out of your reach. To put it simply, the worse your credit score, the more you will pay in fees, closing costs, higher PMI costs and interest.

Here are the five factors that make up your credit score:

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1.      Payment History: 35%

Are your payments on time? Do you have delinquencies or charge-offs? Paying off your debt on time and/or in full will have the greatest positive impact on your credit score.

2.       Outstanding Credit Card Balances: 30%

This factor is the ratio between your outstanding balance on your credit cards and your available credit. In a perfect world your balances would be zero, but in reality, life happens.  Your balances should definitely be below 30% of your available credit limit for a period of 3 or more months prior to the purchase of a home.

3.       Credit History: 15%

How long have you had your credit history established? Someone with a longer past will always be a better candidate for a home loan.

4.       Type of Credit: 10%

Rather than just having credit cards, you have auto loans and/or a mortgage mixed in.  Always having a couple of different open accounts shows responsibility.

5.       Inquiries: 10%

Each inquiry can damage your score up to fifteen points, so be careful with why you are having your credit checked. Note: self inquires have no impact on your score.

How to Prepare for a Home Loan 300x300 How To Prepare For A Home Loan

 

Many think that their credit score is correct, but there may be items hiding on your report that you have not seen before, including mistakes from credit bureaus or errors from a creditor. Increasing your score or correcting these mistakes can take months or even years. This is something that you should start as soon as possible.

 

Ordering your credit report is the first way to spot if your credit needs fixing. By law you are able to order a free credit report from Experian, Equifax and TransUnion once a year. Go to www.annualcreditreport.com to order your free reports. If your report does in fact need to be amended, you need to go to the right source. Sometimes it may mean disputing errors on your report.  If so, go to http://www.ftc.gov/ and you can learn the correct steps needed to file a dispute.

 

The next step in obtaining a home loan is to start getting your paperwork in order. The loan company is going to want to see your last two years of tax documents, last four weeks of income statements, the prior two months’ bank statements, asset verification forms, and other personal documents. Obtaining these documents can take a while, so knowing where to look for them and having them ready is important. After all, you wouldn’t want this to hold up your loan approval process.

After you’ve completed these steps, you are now ready to find a loan officer and start your house hunting process! Good luck!

To see your infographic on preparing for your home loan, click here.

 

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5 Steps to Qualify for a Home Loan [Infographic]

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The number of factors that go into approval can be overwhelming when you are trying to qualify for a home loan. But for a look at the most important determinants towards your mortgage approval, here are the five most basic steps. What kind of credit do you need to have? What documents do you need? And perhaps most importantly, where do you start?

Here is what the road to qualify for a home loan looks like:

Road to Qualify for Home Loan 5 Steps to Qualify for a Home Loan [Infographic]

 

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The Definitive Guide to First Time Home Buying [eBook]

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First time home buyer? You’ve come to the right place. Check out our FREE eBook “The Definitive Guide to First Time Home Buying.” From finding the right neighborhood and Realtor to getting preapproved for a loan and writing an offer on a home, this eBook will guide you through the 8 crucial steps to purchasing your first home!

Click here to download the eBook

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Why You Should Check Your Credit Score Annually

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credit score 300x248 Why You Should Check Your Credit Score Annually

When applying for a home loan, one of the key factors that will determine the amount you can afford to borrow will be your credit. Your FICO® score (Fair Isaac Corporation Score) represents your credit history in one number. Credit scores range from 300 to 850. Your credit score impacts the loan terms for which you qualify as well as the interest rates you receive.

There are multiple factors that make up a credit score. Payment history makes up around 35% of a credit score; making payments on time versus making late payments can have a great impact on your credit score. Outstanding balances on credit cards and loans will make up close to 30% of a credit score. Keeping balances low and not over-extending yourself will potentially help raise your credit score.

Mortgage lenders will also consider your length of credit history. This shows how long you have established credit and the history of when it was opened. There are generally two types of credit – installment and revolving. Installment refers to loans that have a beginning and an end, such as a mortgage loan, auto loan and student loan. Revolving credit is a line of credit that does not have an end date and remains open, such as a credit card.

Keeping up with your credit score is more important now than ever. Maintaining good credit will help you get better interest rates, not just for a home loan but also for credit cards, car loans and personal loans. The best way to keep good credit is to be knowledgeable about your credit and know your credit score. It’s a good idea to check your credit score at least once a year.

Check for errors and duplications, and ensure your personal information is correct and accurate. Paying bills on time is also very important; making on-time payments, even if it is the minimum payment, will help keep your credit score high. Try to keep balances on credit cards below 70% of the maximum credit line; this will potentially help raise your credit score.

Your credit scores are reported by the three credit bureaus – TransUnion, Experian and Equifax. Each of the bureaus receives credit reporting information from furnishers to generate a score. You can order a free credit report every year from each of the three bureaus from the annualcreditreport.com website or call 877-322-8228.

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All loans subject to credit approval. Rates and fees subject to change. Mortgage financing provided by PrimeLending, a PlainsCapital Company (NMLS: 13649). Equal Housing Lender. © 2014 PrimeLending, a PlainsCapital Company. For full licensing and disclosure information, visit http://www.primelending.com/legal.

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Inexpensive Curb Appeal Ideas

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They say you never get a second chance at a first impression. Maybe this is why curb appeal is widely considered among real estate professionals to be one of the most important factors in determining the value of your home.

Curb appeal projects are the easiest maintenance you can do around the house, and it generally increases the value of your home by over 5%. They are usually projects you can knock out in a day, don’t require any paperwork or professionals, and the budget is extremely flexible.

To increase curb appeal with any budget, here are a couple easy projects to consider, as well as their cheaper alternatives. If one task is too big an endeavor, use the other option to get similar results at a fraction of the cost. Just decide what’s right for your needs, and go be a weekend warrior!

Here’s a look at some inexpensive curb appeal ideas:

Garden Inexpensive Curb Appeal Ideas

Get Yourself a Garden

Nothing will make your yard stand out like an all natural splash of color. Get back to your “roots” by exercising that green thumb! Just bear in mind this isn’t the only weekend you’ll be working on this project. Any garden worth having is worth maintaining.

Budget: The cost can vary greatly depending on the route you intend to go. A flat of annuals will cost you less than $20. If you use your garden to grow your own produce, the National Gardening Association says your profits won’t just be on resale value, but also lower grocery bills! They estimate up to a $530 return for every $70 invested.

OR

Work What You Got

You can make your lot look brand new without introducing any new plants. Start by laying fresh mulch over the existing flowerbeds in your front lawn. Trim back the bushes and tree branches to make the house behind them look pristine.

Budget: A bag of mulch will cost you less than your morning latte. Trimming back the shrubbery is free as long as you can borrow someone’s shears. If you need to go out and purchase some, it still shouldn’t cost you any more than $40.

side paneling Inexpensive Curb Appeal Ideas

Swap the Side Panels

The audacity of the project is dependent on how much paneling is on your house. But if you have a brick-front home or just need to spruce up one section, this is a perfectly reasonable project.

Budget:  A good rule of thumb is that you’ll spend a little over one dollar per square foot for your standard vinyl paneling. A little more depending on the various materials you choose.

OR

Power Wash the Paneling

If you’re not ready to commit to such an undertaking, a simple wash could still make your paneling look brand new. Power-washing the sides of your house will undo years of dirt buildup you didn’t even know was there. While you’re at it, get the sidewalks and driveway. An annual cleaning like this will make your house pop no matter your neighborhood.

Budget: You can rent a pressure washer for about $50 a day. But if this is a project you intend to revisit annually, you can buy your own power washer for less than a couple hundred dollars.

 

What other curb appeal projects do you do on a dime? Let us know in the comments below!

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