Financing - Preparation
Your Financial Profile
Lenders need to get to know you as a financial consumer. The best way for them to do that is through your creation of a financial profile. In this file, keep financial statements pertaining to the following: savings and checking accounts; investments; loans— both auto and student, if applicable; credit cards; recent pay stubs and two years' tax returns. This file can be in paper form or electronic or better yet, both.
Your credit score is a number that rates what kind of credit consumer you are. It is derived from a statistical analysis of your credit behavior and defines your creditworthiness. Credit scores range between 400 and 800. Conventionally thinking, a score of 620 or more is considered "good". A desirable score of 680 or more is considered "premium" and may possibly help you obtain a lower interest rate.
If you unsure of your credit rating, you can contact the one of the three major credit reporting agencies to determine it. It is crucial to realize that your credit behavior defines you. Therefore, treat it with thoughtful respect and act accordingly. If you are not happy with your credit score, ask your lender for help. It should not be viewed as life legacy but rather an opportunity to financially improve. There are many ways to enhance it.
As you begin to realize that you would like to buy real estate, try to save as much money as possible. You will need it for the following: down payment, closing costs which can include an appraisal, escrow, title insurance as well as possible home inspections and/or environmental tests. Furthermore, try to pay down existing revolving and high interest rate debt like credit cards. Because lenders like stability, hold off on major purchases, changing jobs, as well as moving money around. If you are considering any major financial alterations, get advice from a lender on the best way to proceed. Consider this if you are tempted to make a major purchase.
A $500 a month debt payment (like a credit card or auto loan) could lower the amount of home you can afford by about $83,000!
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