Building The Credit Profile To Finance Your New Home

With the help of the OVM Financial Blog, we’re taking the next few weeks to help future first-time house buyers do the advance planning that will give them peace-of-mind and a clear path to home ownership. The first step should involve building a credit profile that will meet mortgage approval credit requirements for any kind of mortgage.

Begin by ordering an actual mortgage credit report and arrange for an experienced mortgage loan officer to review it with you. You’ll be looking for any obvious errors or gaps in the information. The loan officer will be looking for weak areas to begin working on and should provide a detailed evaluation that can be easily followed.

One focus will be on existing credit lines. The goal here is to have at least 2 or 3 credit lines or active cards. The longer they’ve been open, the better, ideally with balances at or below 10% of the credit limit. Aspiring home buyers who don’t meet these standards, should begin the process of paying down debt and/or building credit. Mortgage lenders generally require at least 12 months of history on an account to classify it as a good listing.

Use the cards responsibly, keeping the end goal of home ownership in mind. Individuals with limited credit experience who fall into the trap of missing payments and carrying high balances wind up weakening their credit, instead of strengthening it. Another common misconception is that young adults should intentionally borrow money on an installment loan, in order to establish credit. Mortgage lenders are even more impressed when prospective borrowers have established a regular saving program. This approach demonstrates discipline and doesn’t require interest payments on funds that don’t need to be borrowed in the first place!

An experienced mortgage loan officer can provide insights on other factors to consider in the credit building process, such as the right way to pay off collections, steps to avoid dispute language on credit reports and when it may make sense to hire a credit repair specialist. This blog post offers more information and the experts at Team Move in Sanford can provide more detailed assistance, at 919-777-0114.