Credit Mistakes Most Homebuyers Make Before Purchasing A Home

You’ve been renting for a while now and it feels like the timing is finally perfect in order to make the hop over to homeownership. After all, your friends are all buying homes and your job feels a bit stable now.

Our San Clemente Realtors say that if you have given it some thought and are sure you can cover emergency costs such as unexpected roof replacement or furnace repair and you have a realistic expectation of what you can actually afford, then our San Clemente Realtors suggest you go for it. Purchasing a home is a trying experience, only made drastically worse by credit mistakes.

Main Credit Mistakes to Avoid When Purchasing A Home In San Clemente, CA

A majority of San Clemente Real Estate Advisors will tell you that everybody makes mistakes, especially when it comes to their credit. The process by which your credit score is created has long been veiled in shadows, making it doubly easy to misstep without even knowing it.

Nonetheless, there are specific mistakes that homebuyers make again and again, including these items that obviously mean something to your credit score:

Not Knowing What’s In Your Credit File To Start With

The last thing you need is a bit of a surprise when you go to apply for a mortgage. If you have collections that you didn’t know you had, judgements that were never served to you or just plain bad information in your file, these items have to be handle now.

It can take a while to fully erase the effects of any negative information in your credit file, so you need to begin almost instantly.

Our San Clemente Niguel Real Estate Advisors suggest you check it line by line for accuracy and contact any collection agents that may be listed so you can try to work out a payment plan.

Applying For Mortgages Over A Long Period Of Time

Sure, it makes sense to pull your credit file six months to a year ahead of when you plan to buy a home, since there might be a few surprises that will need time to fix.

Our San Clemente Real Estate Agents say that if you pull your scores yourself, it’s not as big of a hit to you as it would be it you had a lender checking your scores, say, on a monthly basis.

When you are certain you are ready to purchase, our San Clemente Real Estate Agents suggest you do all your mortgage shopping within a 14 to 45 day window (depending on the scoring model and version).

Furthermore, our San Clemente Realtors suggest you make sure to ask your lender how long credit inquiries for mortgages will remain grouped, only being counted as a single credit pull.

Otherwise, so many hard pulls will ensure that you don’t move forward to purchase.

Opening New Lines of Credit In With The Though Of Closing

Did you give any thought to skipping the line and buying a new couch today, rather than after your closing? How about doing that while maxing out a brand new credit line?

This is a huge and terrifyingly common mistake that people make. It makes sense, it really does, you just want to be ready to get your move over with quickly once you get the keys.

The problem with a new inquiry is sort of a double whammy. First, it’s a hard pull on your credit, which will reduce your score slightly. Secondly, if you use that credit line, your debt to income will increase.

As a matter of fact, depending on how much of that credit line you use, your utilization rate may also increase.

Your credit score, debt to income ratio and possibly your credit utilization will take a large hit and your loan may be cancelled at the last minute when underwriting is re-verifying your application.

Maxing Out Current Credit Lines

As a majority of you may know, moving can get really expensive, even if you’re just moving across town. The moving truck alone can cost hundreds of dollars, and that’s if you do the job yourself.

There’s nothing wrong with renting a truck, hiring a mover or even hiring a handful of movers, just do it after closing.

Our San Clemente Realtors say that if anything changes to the negative about your credit score, credit utilization and your debt to income ratio, as stated above, your loan can be cancelled. This is not a drill.

Failing To Forward Your Bills

Finally, after closing, you could still make a few credit mistakes problems related to your move. Did you remember to pay the last utility bill at your old place?

How about the broadband? It may seem like an obvious error to avoid, but when you’re in that moving stress haze, sometimes it’s all you can do to grab a pot of coffee and get moving again.

Our San Clemente Real Estate Agents typically say that buying a house with a mortgage can feel like an exercise in paperwork collection, but the truth is that all of it is necessary for you to get the very best price from your lender. After all, what they’re really doing is trying to make sure your success with their loan.

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