We all want to have a house that we can call our own. An investment that can be passed on from our kids and to the next generation. Yet, we are also aware that when we buy a house, we are also stuck in paying our mortgage for the next 15, 20 or 30 years.
Before calling out agents to help us pick a new home, we need to first start with the most important task – find the best mortgage lenders MN. How do we do that? We need to get our credit score in shape.
What’s in a credit score?
Our credit score is an important factor if we want to purchase our dream home. Unlike what we see on television, it is not as easy as it seems. Real estate agents do not just hand over the keys to us. We need to meet a certain credit and income criteria to assure mortgage companies MN that we can repay them.
Having a low credit score does not give mortgage lenders enough confidence that we can pay off our loan. In fact, it signals that lending money to us will be risky. This means a higher interest rate for that dream house that we are eyeing.
Let’s start building our credit score
Being a first time home buyer MN, we need to build our credit score first. How? By paying off high-interest debts first. This will lower our overall level of debt as quickly as possible and will also improve our debt-to-income ratio.
We need to look at our liabilities. First, we need to start paying off our credit cards and recurring loans. This will free up a lot of money that we can use for paying the down payment of that four or three-bedroom house that we have been eyeing on.
Error-free credit score reports
Credit cards paid off? Check. Recurring loans? Ongoing but almost close to being paid off. Great job. However, religiously paying off our debts is not the only thing we need to do. We also need to make sure that our credit reports are accurate and free of errors. In order to do this, we need to secure reports from major credit bureaus in our area. This is so that we can review and dispute in case we see any discrepancy or errors in our credit report statement.
Make it a habit to ask these credit bureaus a copy of the report once every 12 months. This might sound tedious but monitoring will help. This will keep us in tune with our credit score. At the same time, we can easily address any issues should we fall behind, unexpectedly.
Doing all these steps will be beneficial to us. This will give us the power to negotiate for better rates with these mortgage lenders MN. Hence, we are just a few steps away from checking off an item from our bucket list – to own that four-bedroom dream house with a huge backyard.