Apply For Home Loan

When a person decides they want to purchase a home instead of renting a residence, it is a major life decision. A home is the biggest tangible purchase they will ever make. It is far more expensive than buying an automobile, which is the second largest purchase most people will make.

When it is time to go to a lender’s office and make that first application, it can be a little intimidating because you want the home so much. Many people do not understand all that goes into getting a home loan or how to apply for a home loan. The process can be nerve wracking or scary, or it can be pleasant. The better prepared the potential home buyer is when they apply for a home loan, the better the experience will be.

At the first inkling that you begin to believe you want to purchase a home, get your credit reports and go over them with a fine tooth comb. Look for inaccuracies, mistakes and wrong information. If something says you did not pay a bill, but you know you did, it will take some time to request in writing that an investigation be completed and the error fixed. To get your three free credit reports, simply go online to www.annualcreditreport.com and request credit reports from all three credit reporting agencies, Trans Union, Experian and Equifax.

Next, be very careful to make on time payments for any bills you have, including credit accounts and utilities. Try to reduce balances down to below 30% of the credit limit. Paying them off is fine, but don’t close out any accounts. You want to have different kinds of credit besides just credit cards. It is good to have revolving store credit, and possibly a small personal loan from your bank or credit union. You can get a small loan and repay it over six months. This will look good on your credit record and improve your credit score.

If you want to see the credit score, usually there is a small fee, under $12. If you take out that small personal loan from your bank or credit union, the banker should tell you what your three scores are. Each credit reporting agency will have slightly different ways to calculate the score, but they will be similar. A good score is 660; excellent is 750 to 850.

Maintain consistent employment and residential address. This shows stability and is good. If you have adverse entries on the credit reports, such as an arrest, a lien or lawsuit, write the credit reporting agencies and enter a short explanation for the problem. Do the same thing if you missed some payments because you were ill and off work, got in an accident or were divorced.

When you do apply for a home loan, take in all recent 1040 tax forms, several recent paystubs, bank account or checking information, your social security card and driver’s license. Bring a utility bill or other government proof of address. Ask in advance if there are other items your lender will require. Fill out the forms and relax. If you get turned down, keep improving your credit record and go back in six months.