While you still have time to start planning your New Year’s resolutions, it’s a possibility that you’re already thinking about what 2013 will bring. Traditionally everyone wants to shed some pounds, save more money, or maybe start a new job. If you’re looking for a big change, you might be considering buying a home.
There are many ways you can prepare for such a big purchase. Of course you need to save for a down payment, but it’s also important to get your credit in order.
If you haven’t checked your credit report recently, this is something you definitely want to do before applying with any lender. Look over your report and be mindful of any inaccuracies. You should be sure that all the information is correct and that no one has opened up accounts without your authorization.
Late payment penalties or collections that are incorrect or false are something you want to try to get fixed. Getting your credit repaired can really help improve your credit score which could improve your chances of getting approved for the best mortgage loan for you.
Start working on your debts after you have pulled your credit. Try using the snowball method to pay off as many cards as you can; this means making minimum payments on your debts with higher balances while working to pay off the ones with a lower balance. Even if you can’t bring any of your cards down to zero, getting close to it could improve your debt-to-available credit ratio.
If you happen to get your cards down to zero, avoid using them for at least 45 days. More often than not it takes this amount of time for the change to be reflected on your credit report. If you’re going through credit repair you will also want to wait the suggested time (usually 60 days) for changes to go into effect before applying for a mortgage loan.
Once you have applied and been approved for a mortgage loan you will need to continue to monitor your credit and work on managing your debt as lenders may pull your credit just before the closing date. Once you have closed on your dream home and are all settled in you may still want to be mindful of your credit in case you want to refinance your mortgage in the future.