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 worthiness.
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
     payments.
5.  Do not allow yourself to become over-extended, that is having an uncomfortable amount of outgoing cash in 
     relation to your  income.
6.  Most lending institutions will require some proof of income for the last twelve to twenty four months, so make
     sure 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
     information)
8. Deposit 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?

By 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 fee.

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 payment.

Generally 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.