July 5, 2010
Choosing The Best Time To Apply For A Home Loan
This might be considered a non issue since we mostly feel that the time to apply for a home loan is when you are buying the home. You may be able to take some critical steps to improve the chance of getting a mortgage, and even improve the rate you receive.
Why ,you ask? First we need to understand how credit scores work. Even if you do not realize what your own score is, you know that it is an important measure of whether you receive a mortgage\loan and what rate you will have on it. Taking any steps to better your credit score will make a big difference in getting a mortgage.
If you are thinking about buying a first home, or are considering moving up to a different house, there are some timing steps you can take to better your chances for a mortgage.
A number of factors influence the credit score. It is primarily a numerical judgment of a potential borrower’s credit standing. It takes into account many factors, such as how his bills are paid, how many credit lines he carries, what his salary is and how long he has been in the same job.
If you can change some of these important factors, you can improve your score. What are these factors?
If you haven’t always paid all of your bills on time, now is the time to start. This is not to say that your old history will not have an impact, but if a lender can see that your recent transactions reflect a history of on time payments, this will have a favorable influence.
Do not open any new credit accounts if you are getting ready to apply for a mortgage. Lenders even consider inactive credit lines that are too large a danger, because you have the easy choice of overexposing yourself to debt. Even though you are offered great deals such as 0% financing or store discounts with the opening of a new account account, resist the temptation because it may damage your credit rating.
High credit card balances will have a huge impact on your credit rating, so avoid any new purchases, and try to bring down your balances as much as possible.
Now is NOT the time to switch jobs, if you have any choice in the matter. Job stability is a major component of your credit score, since it means you will continue to have income. With a short job history, your job is less safe, and a job loss would mean you could not pay your bills.
You may have some decision over when you retire, and this can help in your loan application.
Lenders prefer to see a steady paycheck to cover the mortgage payment. Apply for your mortgage while you are still working, and then start the retirement process.
You may not be able to make such drastic adjustments to your life, but if you can take steps such as this, you will be able to make sure it is a good time for a mortgage.
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