How to prepare for your Mortgage Financing

When most people decide they are ready to buy a home they usually start by surfing a few homes on line or looking up city or neighborhood data or maybe drive around and check out new model homes.

I highly recommend taking a little time so you are prepared to obtain mortgage financing. A few steps ahead of time can save you thousands in interest over the life of the loan and may even be a deal killer if you are not prepared.

Bank Statements-be prepared to explain any large or irregular deposits to your lender:

 This is usually pretty easy but will always be asked in today's lending environment.

Do not go out and open up any new accounts or apply for any type of new credit:

 In today's lending environment any and all credit inquiries have to be explained to the mortgage lender. There are processes now in place that require the lender to pull credit the day before closing to see if any new accounts have been opened. If there have been you must include those new debts in the debt to income calculation. If you just barely qualified before and there are is a new account opened it could cause your loan to be turned down.

Make sure you don't cosign for any new accounts for a friend or family member:

When you cosign for a car or credit card you are on the hook incase anything happens with that account. You also more than not will have to include this new debt into your debt to income ratio when qualifying for a mortgage loan.

I always counsel my clients on going to www.annualcreditreport.com for a free copy of your credit report. You can also pay a small fee to get your scores. By doing this you can make sure everything is reported accurate on your credit report and handle any issues prior to getting prequalified.

If there are any issues keep in mind it could take anywhere from 30-60 days to get them corrected. You can always fill out the dispute forms but there needs to be a valid reason for the dispute other than I just want it off of my credit report because it's bad! If you are working with a mortgage professional (I highly recommend Chris Lear if you are in Texas) he or she can help accelerate the updating process by doing what's called a rapid rescore. Most mortgage professionals work with credit repair companies. Make sure you do some research on any company you are considering using.

If you have any collections on your credit report I would advise having your mortgage advisor call on your behalf to have these paid. Just paying a collection doesn't really help your score too much..but if your lender can negotiate a payment and removal of the item it will greatly help raise your credit score.

There is a pretty quick way to raise your credit scores which is carry no more than a 30% balance of what your high credit is on any account. If you have the means to pay a few or all of your accounts down you can put yourself in the best position to qualify for the most attractive rates offered from mortgage lenders.

I know this can be overwhelming to most people so the easiest way to handle this is to call your mortgage advisor (once again I recommend Chris Lear) and tell them you are considering buying a home and want to make sure you have all your ducks in a row when it comes time to qualify for mortgage financing!