Home Buyer Credit Repair – Special Credit Considerations When Purchasing a House

Ian Hollander asked: If you are in the process of buying a new home, without question, your first step should be to order a copy of your credit report. You can do this on your own online, over the telephone, or through the mail, but it is imperative that you check your report for accuracy before making an offer on a new home! In today’s more credit conscious universe, you may NOT be able to make an offer on a home until you have been pre-qualified for a mortgage, or had your credit screened by the realty company representing the property, depending on a number of variables that are hard to predict. What is consistent however, across all buying markets, all geographical areas, and all lending institutions, is you need to have reasonably good credit today to buy a home. And never has that been more important, than right now. Foreclosures are pushing all time highs throughout the country. Lenders are literally going out of business right before our eyes. And just last week, President Bush spoke publicly about the frightening amount of Americans facing foreclosure and pending financial ruin. This leads us back to a very important point: You must know your credit score before you apply for a loan. You must repair any blemishes on your credit file before getting a loan. Why? Well, the reason so many people are now defaulting on their mortgages is because they took loans that were * sub - prime * . And those sub prime loans come with less than optimal terms as you would expect. Often times variable rate mortgages, and different financial small print built into the loan to compensate for the added risk their low credit scores dictated at the time. So rather than attempted to fix their credit, many of these Americans, our neighbors, accepted loans with bad terms to buy that dream home. In their haste to buy what they thought was the American dream, they ended up with instead with a nightmare, a financial bloodbath that is ravaging entire parts of the country at this very moment. Would things have been different if these people would have attempted efficient credit repair strategies BEFORE settling for sub optimal loans? Well, of course hindsight is 20/20, and I am no economist, but I think it is fair to say that if many of these people had taken the time necessary to ensure their credit was in order PRIOR to applying for financing, and spent a little bit of extra time if need be getting things right if they were “wrong”, many of these very same folks would not be the newspaper statistics that they have indeed become. And don’t forget – foreclosure affects you too. If you own a home in a neighborhood with a foreclosure, some studies show your property value goes down 1% for each defaulted property within 5 blocks of your house! Ouch is right..:-) We all have a vested interest in keeping the fabric of our credit, and our communities in tact and whole. So if you are thinking about buying a new home, or even have been “pre-approved” for a loan by your local lender, make sure you understand what your credit report says about YOU before you sign on the dotted line. Your family and your neighbors might very well thank you later!

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