Home Buyers--winning the Interest Rate Game!

By: Nef Cortez

Buying a home is one of the biggest expenditures most people will make in
a lifetime. And in many markets where sellers are offering attractive
incentives to buy your next dream home, a first-time buyer can be
intimidated by the whole decision making process. As important as this
life-changing, buying decision can be, it is often as easily influenced by
emotions, anecdotal experiences from friends and family, as well as more
practical matters such as income, credit, down payment saved and other
financial criteria. Too often first-time buyers start the buying process by
"putting the cart before the horse" by becoming emotionally involved in the
transaction without doing their financial homework first.

Once you have begun your home search by looking on the internet on
websites like www.realtor.com for houses in the neighborhood you desire
to live in or by writing down phone numbers from a "For Sale" sign, it's a
good idea at this time to take a look at your own financial picture as well.
While not difficult, taking the time to get solid financial information, namely
your credit report and debt-to-income ratio, will pay off in the long run as
this data will influence what you'll be able to afford and what type of
mortgage you will qualify for.

There are several websites such as freecreditreport.com and
myficoscore.com which enable you to take a look at your own credit report
for a nominal fee. Make sure that you also request your FICO score, a
three-digit number which ranges from a low of 350 to a high of 850, and is
calculated based on assigned numerical values for certain credit
characteristics. The higher your overall score, the less risk there is for the
lender, and therefore the better interest rate that you are more likely to get.
Typically, a number at approximately 620 or above is a fair credit score. In
addition, under a new Federal law, you have the right to receive a free copy
of your credit report once every 12 months from each of the three
nationwide consumer reporting companies. To request your free annual
report under that law, you must go to www.annualcreditreport.com.

While lenders often use their own credit reporting agencies, most of the
data comes from the three major consumer financial gathering data
organizations such as Experian, Trans-Union, and Equifax. Taking the time
to investigate your credit gives you a clear idea of your credit standing and
will point out any potential problems you may be able to work on before
you meet with the bank or loan officer.

Problems or high risk credit characteristics usually include the following;
bankruptcy, derogatory public records, late payments, charge-offs,
repossessions, and serious delinquencies which are examples of negative
factors that can directly affect your credit score. Even carrying high
balances on your credit cards can appear as a negative factor. Although
you may know without a doubt that you have not encountered these
problems, pulling your own credit report will give you greater flexibility and
knowledge as to what type of loans you will be able to qualify for and what
type of interest rate you can expect to get. As the saying goes, forewarned
is forearmed.

Unfortunately, too many potential homeowners who have already fallen in
love with the home of their dreams are too anxious to get information on a
loan they may qualify for and often get their credit reports from several
lenders. Unfortunately, they do not realize that several inquiries into their
credit can negatively affect their overall credit score thus affecting the
interest rate they could have qualified for. So, taking the time to check out
this information yourself can reap you enormous benefits in saved time,
reduced hassles and a checklist of things you might need to work on before
you take the next step in the buying process-getting preapproved for a loan.
For more information visit http://www.nefcortez.com

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