For credit-worthy Kenai Peninsula homebuyers, getting a mortgage can be a walk
in the park…or a nerve-wracking nightmare. The difference usually has to do
with those ubiquitous Credit Reports – the ones TV commercials want to send you
for free (at which point they will try to sell you not-so-free monthly
Anyone who has ever been stalled just as
they reached the final stages of getting a mortgage or refinancing knows that
getting mad doesn’t solve anything. But avoiding a last-minute problem is easy
to do if you plan ahead. At least six months ahead. We like to assume that
outfits as important as the reporting agencies know what they are doing, and in
fact, they do. But they must start with the right information, which is where
we come in. Nobody ever told us this in school, but it’s ultimately our
responsibility to see that our credit reports are accurate.
Whether or not you think you will getting a
mortgage or refi soon, here are some plan-ahead, proactive steps everyone can
and should take. Monitor for these common stumbling blocks:
1. Inaccurate information on the credit report.
The first step is to read your reports. It is very important
that you request those free copies of your credit reports and dispute any negative
items that seem to have appeared for no reason. All three credit bureaus are
required to remove inaccurate information, and they will do so, but only after
you tell them to. My experience is that the agencies can be quick to respond…or
as slow as molasses in January. In Antarctica. The only sure way to set things
right is to allow them time to correct or to ask for more information.
2. Carrying too much revolving debt
adds an unnecessary obstacle for getting a mortgage. A large part of a credit
score is based on your revolving debt ratios. Revolving debt should be kept at
or under 20%. If you are carrying more revolving debt than that, take this
lead-time to whittle it down to a more loan-attracting ratio.
3. Taking on new debt
less than six months before getting a mortgage: bad idea. If you are planning on getting
a mortgage or refinance, avoid taking on other new debt in the six months
leading up to your application. This solves any question over whether you will
be able to pay the new debt as well as the mortgage amount.
Time spent planning ahead and getting
your financing in order will be well worth it once you find the home of your
dreams and are ready to write an offer. Questions? Contact me anytime you wish to discuss
pre-qualifying for a Kenai Peninsula home.