Finding a loan that’s right for you isn't always easy, especially if you don’t go about it the right way. These 4 steps should help you find your way through this often stressful time and make your life a little bit easier at loan time. Completing each step will get you closer to finding the perfect loan with the right price.
STEP 1 OBTAINING YOUR CREDIT REPORT
The 1st thing you want to do is run your credit (if you haven’t done so already). For those of us who have had credit issues this can seem like the hardest part, the part you wanted to avoid but the truth is avoiding it will only make it worse. This is the most important step so PLEASE do yourself a favor and don’t skip it! After all you do want that new house, don’t you? I thought so!
This step is the most important because your credit has a great impact on the terms and percentage of your loan~ NO MATTER WHAT. Of course that does not mean you can’t get a loan if you have bad credit. There are many bad credit loans available today and we say thank goodness to that but we have yet to find a bad credit loan with a great low monthly payment and percentage rate. Unfortunately, that's just the way it is but at least you can get a loan, years ago you would not have been able to do so with bad credit. So in order to reduce your monthly payment and % on a bad credit loan (or any other loan) you must know what is on your credit report to be able to fix it, the point is not necessarily to get your credit to a perfect standing, that takes a long time, what your trying to do is improve it as much as possible before your home purchase so that you can find a loan or bad credit loan that will work for you without it being a financial nightmare.
Also, by managing what is on your credit report you can improve your credit score a.k.a your Fico Score. This Number is the key element in determining the loans you will be eligible for and the terms within the loan. Higher FICO Scores = Lower Monthly Payments. If you have been only human (like most) and have made a few financial mistakes your credit report and Fico Score were most likely affected. It happens to the best of us and can sometimes take months, even years, to repair so that is why we list it as step #1. It needs to be put into action ASAP because it is a process that does take time. Often, there will be items on your credit report that do not belong to you, etc. These can be disputed and it takes about a month to update. Other things such as establishing or re-establishing credit take longer as do delinquent accounts, etc. I would see what you can do on your own first to fix it up but if it is to much of a mess to clean up on your own there are companies who can help you fix your credit and even remove some of the items. This also takes a lot of the stress off of you. Even if your credit is not an issue it is a good idea to run your credit and get your score. Knowing these can give you leverage during the loan negotiating process by allowing you to only accept the best offers that are reflective of your credit score.
Okay, now there are 3 ways in which you can obtain your credit report.
First, many people don’t know that they are entitled to one free credit report a year -per credit bureau, yes, all 3 are obligated to give you 1 free credit report a year. Here's the catch- you have to ask for it. They do not automatically send it out. It is very easy; please take advantage of this if you have not already done so. You can you obtain it at www.annualcreditreport.com. Please note there are companies that offer free credit reports if you sign up for a trial offer of a product. This is not the same thing at all. You do not sign up for anything, it’s your for the taking-FREE!!!!The only downside is that your Fico Score is not included. You will have to purchase that from a credit bureau or you can purchase it from myFico.com either way it is worth the money.
Second, you can purchase a credit report through each individual credit bureau. The three credit bureau's are: Experian, Equifax and Transunion. You can view it over the Internet or have it mailed to you. These sites sell their single report for a reasonable rate and you can add on your credit score for an additional fee. They also offer 3-n-1 credit reports which I do not recommend because they are very hard to read, you don’t really know which credit bureau has which accounts listed because everything is sort of merged together and they are VERY long.
Third, there are many other companies that can obtain your Fico Scores/Reports for a reasonable price. Just google “credit reports” and you’ll find hundreds. If you choose this route make sure you read the fine print. So, step one is over~ it only gets better from here and remember don’t worry, as long as your working at fixing your credit it will get better. Now on to step 2, one-step closer to your new home
STEP 2 LOWER YOUR DEBT
The 2nd step is to lower your debt (if you have not done so already). You want to try and bring your debt down as much as possible before owning a home. This sort of goes hand in hand with the credit report. Another factor lenders look at besides your credit score is your debt to ratio income (how much money you make vs. how much money you owe). When your debt to ratio income is good your % decreases. So basically if you pay down your debt you win two ways because paying down your debt will also improve your credit score (See, I told you this would get easier. Are you having fun yet?). So, if you get a better % you get a lower monthly payment and maybe even a better loan and then getting the loan wont be so financially stressful. I think an even more important reason to pay down your debt is so that you are not bogged down with bills AND a new mortgage. Why own a home if your always going to be at work trying to make ends me? I know it makes sense but is often easier said than done. There are many great companies who specialize in debt consolidation. Basically, they know little tricks that we might not when it comes to repaying our debt. Credit Solutions is a wonderful company, they are actually the debt settlement company in the US and were featured on NBC. Something to look in to. Anything to make life easier, especially during this time. Buying a home is a wonderful experience and you should be able to enjoy it so any shortcuts are worth taking
STEP 3 KNOW WHAT YOU CAN AFFORD
The 3rd step is as easy as a few clicks. Your friend the mortgage calculator can help you figure out what you can afford. Use an internet based mortgage calculator to find the right loan price for you. You can find one at www.casagrandenewhomes.info/Loan.html It’s free and very helpful. This will give you a heads up and maybe even make you re-think your price range +/-. Going in knowing what you can afford will also cut out the back and forth between you and a lender because you will know up front a price range that is financially acceptable for you. Also go in with a set price range and don’t exceed it unless you CAN afford it. Only you know what you can afford and remember you want to enjoy that new house right/ Even if it means passing up a few of the upgrades.
STEP 4 SHOP AROUND
Your 4th and final step is to find and choose the lender with that perfect loan. Do not let a whole bunch of lenders run your credit. Especially when you just went through all the trouble to improve it. Your looking for the loan that is just right for you, look for specials or ad's that pertain to you. Do your homework on your top 5 and then from there choose 2 or 3 to work with. Have them competing over you. Remember you want to get the best deal, you’ve worked hard you deserve it. Now go and get ‘um!!!!! I have listed a few great online lenders but again try to find what works for you.
1. iMortgage Central iMortgage centralis a great company. They have thousands of loans to choose from. They allow you to compare lenders and choose the one that’s right for you. They get you 3 different quotes without pulling your credit, they also offer loans to those with bad credit, and you can get a quote within 24 hours. The best thing is there is no obligation. With iMortgage you can shop around with just one site and one application without it affecting your credit score. Perfect for all of the things we discussed above!
2. Ameriquest Ameriquest Mortgage is another great choice. They specialize in loans for those with not so perfect credit. Ameriquest is one of America's most flexible lenders with over 28 years in experience. They provide excellent customer service and believe in finding the loan that is right for you. Visit them today for more details on all of their excellent loan and refinancing programs.
Finally you have made it, ready or not your loan awaits you. GOOD LUCK!!!!!!
