Select A Department:

Courses in this Department

How Ready Are You to Buy a Home?

Determining Your Dream Home and Finding It!

Factory Built Homes Are Worth a Look

Purchase Manufactured Homes with FHA Loan

How to Buy a Foreclosed Home

Pros and Cons of Corner Lots

Know the Neighborhood Before You Buy

Tune in to an Open House on the Radio

Finding a Qualified Broker or Agent

Shopping for a Loan and Choosing a Lender

How to Improve Your Credit

How to Survive the Loan Application Process

Making an Offer and Signing Contracts

Cancel Your Contract in 3 Days

Understanding the Closing/Settlement Process

Choosing Home Inspection and Settlement Professionals

Double Check Your New Home - The Walkthrough

Know Your Consumer Rights

Seniors Have Many Housing Opportunities

Preparing for the Big Day -- Relocating Moving

Make Your Home Your Castle - Cost Effective Redecorating Ideas


Understanding Your Credit...

...and the application process.

Loan Pre-Approval
It's your first priority.

Pre-Qualification is only a prediction. Pre-qualification means that a lender has asked you some questions and based on your answers, told you approximately how large a loan you may qualify for, subsequent to verification.

Pre-approval is a lot more specific than pre-qualification. When you're pre-approved, the lender has documented your financial information and run a credit check, so you're actually very close to final loan approval.

Why Get Pre-Approved?
You're a Step Ahead of the Competition.

Today's real estate market is so competitive it resembles the land rush of the 1800s, as homebuyers race each other to open houses. In some areas, it's not unusual for choice homes to sell within a few days after going on the market. Pre-approval gives you an advantage because it establishes your buying power with sellers.

You're Less Likely to Lose Out

Pre-approval also puts your financing on a fast track, so you can close the sale sooner. Home sales contract offers usually include a grace period for the buyer to obtain financing, perhaps 30 days, or less if the seller has competing bids. If you fail to secure financing within that period, your chances of getting the house worsen dramatically. You could lose out to another buyer while you're scrambling to find financing. Put yourself in the seller's shoes. Why wait around when higher or more solid offers are available? It may take a little longer to get pre-approved, but it's well worth it.

How Does It Work?
What loan underwriters look at.

Loan underwriters will examine your savings or cash-on-hand, your income, and your debt to determine how much you qualify for. To get a head start on the loan pre-approval process, you'll need to assemble some documents. But the first thing any lender will do is run a credit report on you.

Correct any Credit Report Mistakes

If there's bad news involved, you want to be the first to know. That way you can repair your credit before possibly striking out on your first loan. The second reason to obtain your credit report is to correct any mistakes. Through no fault of their own, one out of every four consumers has mistakes on their credit reports. It can take weeks to correct your credit report, so you're much better off getting a copy of it prior to completing a loan application.

You Have a Right to Know
Find out.

Under federal law, a credit reporting company has a reasonable time to respond to your complaint, typically 30 days. If the error-ridden credit report is already in the hands of your lender, find out which credit reporting company provided the information. If you ask for a copy of the report within 30 days of your loan denial, the company must send you a copy, along with the name of any other lender who has received the same report within the last six months.

Where to Get Your Report
Some will give it you free!

Experian is the largest of the credit reporting companies. If you were denied credit for any reason in the last 60 days, Experian will provide you with a FREE copy. Their number is 800-682-7654. Trans Union and Equifax also provide reports. Any company whose report has been the cause of your denied credit owes you a free copy.

What if There's a Skeleton in My Closet?
Be up front about it.

Remember to be honest on your loan application about past credit problems. Don't try to sneak anything by or you'll probably be rejected.

But keep it in perspective. If the mark on your credit report is a couple of late payments on a credit card or a car loan, write the lender a written explanation. Perhaps you were on vacation, or lost the payment coupon. Sloppy bill paying can come back to haunt you. But if you have some sloppy habits in your past, explain why in writing. It may help you qualify for a loan.

Remember that even if you have major problems, the worst case scenario is you'll have to spend a year or two cleaning up your credit and paying your bills on time.

Time to Get Your Paperwork in Order

Here's what to gather.

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