Related Articles
What today’s buyers really want: Plants, patios and peace of mind Design Recipes: Foundation Colors Retire Right: The top 5 myths about reverse mortgages – busted Main-Floor Living for Ultimate Convenience Boulder Creek Neighborhoods at Baseline in BroomfieldIt may not seem like it, but there is a process to buying a home, and taking certain steps in the proper order just about guarantees success. Taken out of order – putting the cart before the horse – the steps are inefficient and counterproductive, and the process becomes chaotic.
Remember when you were learning algebra? You would get the wrong answer if you tried to take a shortcut. The steps are there for a reason, and they simply must be followed in order for you to be successful.
Over the next three posts, we’ll examine the three steps you must take before viewing even one home for sale.
Today, we look at the first step: figuring out where you stand financially. If you need a mortgage loan, this is the most critical step in the process, and it can make or break your house budget.
Step 1: Check Your Credit
When faced with a loan application, the first task on a lender’s to-do list is to order the applicant’s credit reports and determine his or her credit score. This score is produced by Fair Isaac Corporation and is known as your FICO® score. This score not only reflects your credit risk but will be used to determine the interest rate you’ll be offered.
Calculated from the data in your credit reports, FICO® credit scores range from 300 to 850, and FICO® uses five categories in the calculation:
Payment History: FICO bases 35 percent of its score on your payment history. Account Balances: 30 percent of your score is based on your current account balances, listed in your credit reports. Length of Credit History: This category is used to determine 15 percent of your credit score. New Credit – 10 percent of your credit score depends on new credit obtained. Types of Credit – The types of credit you use account for the final 10 percent of your FICO® score.This formula is not set in stone. Young people, for instance, with short credit histories are weighted differently than those with long credit histories.
You are entitled to a free copy of your credit report from each of the three major credit reporting agencies once a year. Ensure you order the reports at AnnualCreditReport.com, the only site authorized by the federal government.
Next time, when we examine Step 2 in the home-buying process, you’ll learn how to clean up your credit and raise your score.
Rob Proctor is the Broker/Owner of At Home Real Estate Company in Loveland. Born and raised in Loveland, Rob calls Northern Colorado (Loveland, Fort Collins, Greeley and Windsor) his home with his wife and three daughters. To contact Rob, call 970.481.2133, e-mail rob@athomerealestateco.com or visit athomerealestateco.com.
Stay up to date with area Real Estate and Home & Garden news information with the latest e-edition version of atHome Colorado online
This article is brought to you by atHome Colorado, your weekly insight into real estate, design, and community trends, published weekly by the advertising and marketing department in the Boulder Daily Camera, Loveland Reporter-Herald, Greeley Tribune, and Longmont Times-Call
Read More Details
Finally We wish PressBee provided you with enough information of ( First time homebuyer: Steps to success – Step 1 )
Also on site :