Clean up that credit before you buy a home this spring

Melissa FosterAre you thinking about purchasing a new home this spring? Well now is the perfect time to take a look at one of the most important factors when you apply for a mortgage, your credit.

Your credit score is a snapshot in time of your credit standing. The better your credit, the better pricing you will receive on a number of items from insurance to car loans. If you don’t know your credit score you can access it for free once a year at www.AnnualCreditReport.com. You will be able to look at your credit report from all three major bureaus that track the data. Taking a look at the report on a yearly basis is key so you can correct any discrepancies or dispute any blemishes that you believe are incorrect.

If your credit score is in need of a little love be careful with your purchases. Ensure that you are paying off your balances every month, or working to reduce your overall debt load. The basic plan is to have three working credit lines at any one time. One of the accounts should have a larger credit limit and you want to keep your oldest accounts open to show depth and years of open credit.

When you’ve got your credit in order and you’re ready to purchase a home here are a few secrets for a smooth loan approval to keep your home buying process on track.

Do
• Continue making your mortgage or rent payments
• Stay current on all existing accounts
• Keep working at your current employer
• Keep the same insurance company
• Continue living at your current residence – inform you loan officer if you move during the process of your loan
• Continue to use your credit as usual – maintain a ratio of 25% or less to your high credit limit on all credit cards

Don’t
• Make a major purchase (car, boat, jewelry, furniture, etc.)
• Apply for any new credit (even if you seem pre-approved)
• Pay off charges/collections without discussing with your mortgage professional
• Close any existing credit card accounts or change bank accounts
• Max out or over charge your credit card accounts
• Refinance any current loans you have
• Move money around from one account to another
• Make any large cash deposits into your accounts
• Co- sign for anyone on a loan

Most importantly, make sure you have a trusted mortgage professional to guide you through the process. At Evergreen Home Loans, we are in the business of helping individuals learn more about their credit and lead them toward homeownership.

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