May 13, 2021
Do you want to buy or build a home? Before you apply for a mortgage loan there are some steps to take in the planning stages to get you closer to loan approval.
Checklists can be important tools when making the preparations you need before you apply for a home loan; purchasing a home is one of the most important investments you can make; you’ll have an easier time in the process if you are organized.
You will want to start preparing this checklist long before you are ready to fill out paperwork to apply for the mortgage or to get pre-approved.
This is a process that should begin, at a minimum, 12 months ahead of your application.
What should you put on a credit checklist when prepping for the mortgage application? It pays to think like a lender–what does the lender want to see on your credit history?
Review your past credit performance, anticipate future credit activity, and make sure your credit report is free of identity theft and/or information that is out of date or simply inaccurate.
A mortgage loan credit checklist is not complete until you have the following action items on it:
- Requesting copies of your credit reports from Experian, Equifax, an TransUnion
- Review your credit reports for evidence of identity theft and prepare to dispute them if needed
- Note the dates of your last late or missed payments
- Reviewing the reports for erroneous information such as wrong name, address, etc.
- Review your credit for details that should no longer be on your report
Why do we suggest you review the dates of your last late or missed payments?
This is a very important factor in home loan approval; you must have no late or missed payments 12 months or better ahead of your loan application, and you should also make certain you do not apply for any new lines of credit within the same time frame for best results.
And why not? The lender can and often does check your credit more than once during the home loan approval process. More than one home loan has been derailed because of changes in debt-to-income ratios, a sudden change in credit scores, etc.
And it never pays to delay looking into issues associated with your credit report–if you find problems you will soon discover that correcting your report does NOT happen overnight. You will need to build in extra time to address such problems.
Correcting a credit report requires you to initiate a dispute with the credit reporting agencies and in cases of identity theft you’ll have to file police reports and other paperwork.
FHA loan rules, lender standards, state law, and federal requirements may all have a say in how such issues are dealt with. Remember that a participating lender won’t be able to approve a home loan with certain credit issues unresolved.
When in doubt, ask a participating lender to give you some advice on how to proceed for best results for your home loan. But don’t wait too long to ask–get your answers as early as possible in the planning process.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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