I AM PLANNING TO PURCHASE A HOME, SO WHAT SHOULD
I DO TO IMPROVE MY
CHANCES OF OBTAINING FINANCING?
1. Do not take on any
more debt right now since it may negatively affect
your income to debt ratio.
2. Whenever possible,
pay your obligations early and pay off any revolving
charge accounts, including credit cards.
3. Pay your utility
bills on time. Some creditors can use your
paid-on-time utility receipts over the last twelve
months when necessary to obtain your credit
4. Save money on a
regular basis. If you are able to regularly put a
monthly pre-determined amount into your savings
account over a twelve month period, this may be used
to demonstrate that you can make similar mortgage
5. Do not allow
yourself to become over-extended, that is having an
uncomfortable amount of outgoing cash in
6. Most lending
institutions will require some proof of income for
the last twelve to twenty four months, so make
you can verify your income.
7. Before seeking
credit, you may wish to obtain a copy of your credit
report from each of the
three major credit
repositories in order to
determine your score and correct any errors. (See
bottom of page for contact
your intended down payment in an account at least
three months before seeking approval for credit.
IT’S ALL ABOUT CREDIT, INTEREST AND INVESTMENT
Generally speaking, the
better your credit scoring, the lower your finance
charge; however, you should always make comparisons to
assure that you are getting a competitive interest
rate from your lender. A fixed dwelling, owner
occupied residence will usually provide access to
some of the lowest interest rates possible.
When making a purchase,
weigh the benefits. If you are paying 9% interest
on a mobile home which depreciates 5% per year, you
are losing up to 14% per year plus maintenance,
insurance and taxes. Is it possible that you can
sell the mobile home, use the proceeds as a down
payment and finance a fixed dwelling at only 5½%
which might also appreciate at 5-8% per year?
Also, can you rent the mobile home and purchase a
fixed dwelling for your primary residence in order
to benefit from the reduced interest?
decreasing the finance
charge you are paying, you increase the amount of
home you can afford and by purchasing a home that
increases in value your home becomes an investment
rather than a liability.
BEFORE SIGNING, KNOW
WHAT YOU ARE SIGNING
You may be
charged fees for realtor commission, lender
origination (usually 1%), loan processing, lender
funding, appraisal, document preparation and
recording. Do not sign any papers containing
charges that you do not understand.
REPAIRING BAD CREDIT
When paying your
bills, your secured debt should have priority over
the unsecured debt although you are obligated to
repay all debt. Declaring a bankruptcy will
negatively affect your credit for ten years and
should only be a last resort. A debt consolidation
loan may be necessary in order to pay off any high
interest unsecured debt with the equity you may have
in your home. If this is not possible, it may be
necessary to contact a debt reconciliation company
that will help to negotiate your unsecured debt into
a singular and lower monthly payment. Some debt
reconciliation companies charge a monthly fee while
others charge the first month payment plus a monthly
If you are two or
three months late on revolving unsecured debt, it is
likely that these companies will work directly with
you to reduce the interest payment. If you are
unable to pay for four or five months your creditor
may accept a direct settlement on a percentage of
what you owe.
Making a less
than full payment settlement agreement with your
creditor(s) will cause negative reporting on your
credit report; however, if you make a settlement, make
sure to obtain a copy from the lender stating that
the creditor will record your debt as
fully-satisfied before you complete the settlement
speaking, negative credit reporting will appear on
your credit report for up to seven years unless it
is recorded by a government entity or court which
may be recorded for up to ten years. It you have
negative information recorded that is longer than
these time periods, you should notify the credit
repositories that it should be removed.
It is imperative
that you notify all three companies of any needed
adjustments or errors that your find. Additionally
you are allowed to record one statement answering
each negative credit report which can then be viewed
by those checking your credit report.