Start Preparing Today for Your Loan Application

Just as you’d be preparing yourself by training for a major sporting event such as a marathon, you need to get into great financial shape for what may be the most important transaction you ever make.  As you would for a race, you need to begin preparing many months before the big day – the one on which you make your mortgage application.

There are three overlapping aspects to properly preparing your fitness regime:

Get your credit score up:

Request a copy of your credit report (you’re legally entitled to a free one annually) from https://www.annualcreditreport.com/index.action and check it for errors as soon as it arrives.  Errors are amazingly common, and can take a long time to get fixed.  Also, find out your credit score and begin to monitor and manage it.

Reduce your credit card debt as much as you can:

If at all possible, you certainly want your balances to be less than 30 percent of your credit limits, but the lower the better. That will drive up your credit score.

Hold off on opening new accounts:

Your debt-to-income ratio is one of the most important considerations in preparing for lenders when they work out whether to lend to you, how much and at what mortgage rate.  Significantly adding to your indebtedness in the months before you make your application is going to cost you, so wait until after closing for that new car, credit card or personal loan.  Additionally, your credit score invariably takes a small hit whenever you open a new credit account.  Providing that account is subsequently managed well, the hit shouldn’t last longer than a few months.  But even a small ding can move you from one credit category to a worse one with a worse rate, and that can prove very expensive over a 30-year loan.

Contact our home loan agents in San Ramon for loans and the steps preceding getting a loan.