House hunting is possibly one of the most thrilling, yet most stressful times in a person’s life. The end result of your hard work and saving money to own a home can be extremely rewarding. The hoops you need to jump through in order to achieve that goal may not always be as exciting though.
The obstacle that so many Americans run into is with their home loan application. You may have found the perfect house, you’re prepared to close the deal, but then you sit on pins and needles while some lender decides your fate.
That’s why your decision to deal with past credit and debt mistakes should come long before you even begin looking for that perfect home. Lenders determine whether you’re approved or denied based largely on your credit score. If you’ve allowed blemishes on your credit report to stick around, you may find yourself scrambling to find a mortgage lender that’ll approve you in the 11th hour.
Outstanding Debt
If you have debts that are unpaid, you’re basically telling potential lenders that you’re unable to handle your finances responsibly. You’ll want to consider paying off those creditors or collection agencies, or perhaps utilize debt relief services. You may not be able to have those accounts removed, however an account listed as “paid” is going to appear better than one listed as a “collection account.”
Don’t let the first time you look at your credit reports be after a lender runs a credit check. You want to be ahead of the game when it comes to what those reports are saying about you. The older a paid collection that’s listed on your credit gets, the less impact it will have on your scores.
Plan Ahead
Once you get the idea in your head that you’re going to want to purchase a home should be when you take a look at your finances. Your credit reports are going to dictate how lenders perceive your ability to pay them back. If you start verifying that all of the information on your reports is correct 6 months or so in advance, you’ll have a much better chance of coming away from the home loan application process with a smile.
Whether you need credit repair or debt settlement is only something that you’ll know for certain. But if you bury your head in the sand and hope for the best, you may end up disheartened by the whole house hunting process. Make sure you’re completely prepared. Best of luck and happy hunting!
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