A
little time spent shoring up your credit, crafting your budget and organizing
financial documents will go far in smoothing the way to a home purchase. Ideally,
you can start working on your home-buying project before you even start shopping
for homes. Keep in mind that most buyers take eight weeks to actually shop for
a home, according to a survey by the National Association of Realtors. Your financial
prep work should start well ahead of those eight weeks. "My
advice is to start to talk to your local Realtor six months ahead of time,"
says Pat Vredevoogd Combs, a practicing residential broker in Grand Rapids, Mich.,
and president of the National Association of Realtors. "Most have a good
handle on mortgage people in the area. And, there are a lot of really cool mortgage
programs out there for first-time buyers."
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| 3 steps to take before applying | |
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For example,
Combs says some local governments will offer interest rate or down payment subsidies
to buyers who agree to buy a home in certain areas. And governments or employers
may subsidize teachers, fire fighters, police officers, nurses and other service
professionals who have difficulty affording a home in high-priced communities. A
hospital trying to recruit and retain nurses, for example, might offer a down
payment loan, which is forgiven and turned into a grant if that nurse remains
employed with the hospital for several years, says Combs. Before you begin your house hunting, there are three important
steps to take to make sure you are eligible for the best interest rates and to
make the mortgage application process a breeze.
1.
Get your credit in shape: Order your credit reports
One of the first steps any prospective buyer should
take is to take advantage of the free credit reports
everyone is entitled to request annually, thanks to
federal law. While there are many sites on the Web
offering "free" credit reports, many of
those offers require that you sign up for a free trial
of a credit-monitoring service that will cost money
if you fail to cancel during the free trial period.
The official site where you can get free, no-strings-attached
credit reports annually from the Equifax, Experian
and TransUnion credit bureaus is www.annualcreditreport.com.
You can receive one free credit report from each of
these three agencies every year.
David Reed, an Austin, Texas, mortgage
banker and author of "Mortgage Confidential:
What You Need to Know That Your Lender Won't Tell
You," says you should review each of those reports
for errors. There could be mistaken entries noting
late payments or account information that belongs
to someone else. Common names sometimes get mixed
up on credit reports, as do "Juniors" and
"Seniors" in the same family.
"I see that a lot," says Reed.
If you spot an error, you should write
to that specific creditor and request a correction.
Bankrate has a work sheet to help you request
and track corrections on each of your credit reports.
| -- Posted: March 19, 2007 |
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