A colleague of mine south of the border does a great job of illustrating with a real-life example the things we need to keep in mind when applying for credit. If you’re new to the process of buying a home, this is some great — and succinct — advice.
Via Gabrielle (Kamahele) Rhind, Associate Broker (Tierra Antigua Realty, Tucson AZ Real Estate):
With anxious Tucson home buyers yesterday, I saw the lender’s smile turn to a scowl as she reviewed their credit report. Clearly, the buyers “forgot” to mention a few things. When the lender asked them about late payments on two credit cards, the buyers responded:
“We didn’t care to pay it- it’s just a piddly $17.00 a month.” Oh. Okay. Hmmm.
The lender, now looking at her watch, sharply said, “Well if you don’t care to pay $17.00 a month how do you intend to convince me you are going to pay $600.00 a month?”
So yes, if you want to buy a home and get a loan – it’s a good idea to care about that “piddly” monthly payment. Especially if you have a bankruptcy or other issues on your credit report.
If you are unsure about what your credit position is and you want to purchase a home – the first thing you need to do is make sure you know what “good credit” is:
Call and meet with a lender. They’ll be honest and tell you point blank if your credit is good and what you need to do to fix issues if it isn’t good.
If you are self-employed, keep in mind, the “income” lenders use is what you report and file on your income tax returns.
Once you’ve made the commitment to buy a home and fix your credit — DO NOT go out and start buying more things. Especially big things likes cars, TVs, etc.
Don’t get frustrated. Your credit didn’t get bad overnight and it’s not going to get fixed overnight. It will take discipline and patience.
Stop searching the Internet for homes until you are ready to buy. This will only disappoint and discourage you from staying focused on what you need to do first. Keep in mind – there will always be a great deal on the perfect home for you!
And – pay all your bills on time and every time!