Month: April 2016

As the old saying goes, an ounce of prevention is worth a pound of cure.

This has never been more true than with regard to your credit report, especially when you get ready to finance a home. Understanding your credit report before you attempt to finance a home may pay you huge dividends in reduced time and stress.

A credit report is basically a report card that lenders use to determine how you manage your credit.

By knowing what’s on that report, and also being aware of what your lender will see when you attempt to finance a home, you’ll be prepared and your expectations will be set.

It’s important to bear in mind the fact that you may have to take some action based on information found in your credit report.

As upsetting as it may be to realize you’ll need to pay down or pay off debt, which could take several months depending on the amount, it’s even more upsetting to not know until it’s too late.

Plus, if there are incorrect items on the report, you’ll have time to correct or dispute them.

And time is of the essence; even a very simple transaction, such as making a single payment, may take 30 days to show up on a credit report.

More involved issues, such as disputing a transaction or removing incorrect information on a credit report, may take much longer. The more ahead of the curve you are in this process, the better off you’ll be.

Because interest rates have been so low for so long, you can’t blame people for believing this is the norm.

But families who financed homes in the 1980s know otherwise. In fact, if it were 1980, you would be looking at mortgage rates that were in the 13-15 percent range, as opposed to today’s rates of 3-5 percent.

Rates can and do swing widely.

While it’s unlikely that rates will increase to this level anytime in the near future, if you’re purchasing a property in 2016 (especially if you are a first-time buyer), you may want to discuss your home financing options with a mortgage professional.

Renters in particular should be concerned about predictions that rent increases nationally are expected to outpace increases in housing prices in 2016; as a renter, at least get a picture from a mortgage professional of the alternatives available to you in the current low-rate environment.

The state of interest rates is really only one factor of many you need to consider if you are buying a home in the near future.

You also need to be aware of other factors that come into play, including your assets and your credit.

Down payments, closing costs, and other expenses incurred in the process require assets; if you need to start saving now, you’ll need to know how much.

And if your credit rating needs attention – such as paying down debt to get your debt-to-income ratios in line, or addressing items on your credit report – start now and you’ll be ahead of the game when you’re ready to launch your home search.

Even if you are planning on purchasing a home within a longer time frame (three to six months), you’ll want to discuss with a mortgage professional what may lie ahead, how to manage your expectations, and what actions to take now.