How to Make Sure Your Credit Remains in Good Shape While Buying Your Next Home
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People do not buy homes all that often in their lifetimes, so when they are on the process of buying a home, what are some things they can do to make sure their credit rating remains in good shape while buying a home? Yes you are right people do not do this every day. What they may not know if that lenders will be checking their credit throughout the loan approval process all the way up until the day of closing. So buyers need to be very careful about how they use credit during this time. Here are some examples of home buyers that actually LOST their loan approval and had to wait a very long time before they could buy.
Credit Score Management; What buyers need to know while shopping for a house:
●No Payments for 6 Months show up on credit as if you owe the FULL BALANCE MONTHLY. So the recommendation is… Do not go buy any big ticket item on credit Mortgage lenders want to know about:
●Track where the down payment and earnest deposit came from
●I just had a discussion last night with one of my buyers who assumed I knew all about his loan approval process.
Many times the lenders cannot share that personal data but the buyer did. The buyers charged some improvements. They plan to pay them off after their home sells and before they close on their new home. However, even though they still qualify for the loan no problem, it raised a red flag with the underwriter and the sometimes have to write a letter explaining the issue. After you close on your home you can shop on credit all you want . If someone is selling a home then buying, they need to be very careful about making sure all payments are made and on time. The Cares Act allowed people to stop making payments for up to 1 year Do NOT skip a mortgage payment! It will stop you from buying your next home for at least 1 year!
While the law says the lenders cannot report a mortgage late or charge late fees it DOES:
■TAG THEIR CREDIT REPORT AS BEING IN ‘FORBEARANCE.’
●That means those people cannot home purchase for 1 yea
So, if you are shopping for a home, this is the time to keep everything the same unless otherwise advised by your lender. Make payments on time and do not shop for new furniture or appliances until AFTER closing…
What are some other things that could affect someone’s credit score?
1. Besides not buying STUFF, especially big ticket items like cars and anything on “No Payments for 6 Month” deals until after closing.
2. Please do NOT quit your job
a. I’ve heard of multiple deals falling apart at the closing table because the buyer announced to title they quit their job.
b. Title then closes the file and ends the meeting. They have to be a neutral party in the sale
3. Many lenders put a new requirement on out of town buyers that they have to start their new job before they can close on their home. So, if it’s a new job job buyers need to plan for it.
4. And some credit basics like:
a. Don’t miss payments
b. Don’t CLOSE credit lines after you have applied. It can drag your credit score down
c. Of course stay out of furniture stores and appliances stores until AFTER closing then you can shop away😊
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