How Do Loans Work

First things first.... Before you even think about applying for a mortgage loan, obtain copies of your credit report and your FICO credit score. This isn't as much work as you would think and before we can too much farther let me tell you, you are entitled to a free credit report from all 3 reporting agencies once a year. So how does this work, simple go to annualcreditreport.com.

Now with that said keep in mind you won't get your FICO score but that's nothing to be concerned about at this point because the agency working on your loans will run your credit anyways so why pay twice let them do the work.

Your FICO score is the three-digit number that's used in 75% of mortgage-lending decisions.
You can order your FICO score for a fee of $14.95, which includes a copy of your credit report .

Doing this at least six months in advance should give you plenty of time to challenge any errors on your report and ensure that they're removed by the time you're ready to apply for a loan. You can also see the legitimate factors that are hurting your score and do something about them, such as paying off an overdue bill or paying down credit card debt.


Get yourself pre-approved -This is the most detailed part of buying a home you will need tax returns, pay stubs and other information. Once pre-approved you will know how much house you can afford. There is no sense looking at houses that are beyond you price range.

First time buyer programs. Sponsored by state, county or city governments, often offer better interest rates and terms than you'll find among private lenders.

Do not borrow too much money. Your monthly payment should be 28% of your gross income. Make sure to figure mortgage insurance and taxes as well. Lenders are perfectly willing to let you overextend, knowing that you'll probably forgo vacations, retirement savings and new clothes for the kids rather than default on your mortgage.

Seek help from a mortgage broker and let them do some of the work for you. Do your research and take the time to find the best possible interest rate on your loan.

Home