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3 Bumps

Fix credit on our own or apply for the loan now and get help?

We are looking to be 1st time home buyers. We want to close no later than July 2014, because the lease is up at our rental house Sept 2014. Our credit can use some work, and we hope the time between now and then we could repair it because we have more money coming in from an additional new job. We will also be in the position to have 20,000 saved by the time of purchase for down payment. We hope to get approved in the 200,000 range, meaning a 10% down payment. Should we try to fix our credit on our own by paying off old bills and keeping cc balances down or should we go ahead and apply for a home loan and let them tell us exactly what to do to fix our credit? I went to a 1st time home buyers workshop last weekend and the bank there said they can tell you almost exactly what you need to do to get your credit in place for underwriting. Which should we do?

Answer Question
 
Anonymous

Asked by Anonymous at 4:27 PM on Mar. 3, 2013 in Home & Garden

Answers (7)
  • what will work best for you? which are you most comfortable with doing?
    san78

    Answer by san78 at 4:39 PM on Mar. 3, 2013

  • We think we know how to fix it ourselves but we would like the piece of mind of actually working with people who do it for a living. We wouldn't want to pay down all our bills only to find we should paid certain ones at certain times. We need to be home owners by next year. I refuse to pay someone else mortgage any longer.
    Anonymous

    Comment by Anonymous (original poster) at 4:58 PM on Mar. 3, 2013

  • Do it with the professional!
    staciandababy

    Answer by staciandababy at 5:00 PM on Mar. 3, 2013

  • Well, it's always good to pay down bills and that will reflect positively on your credit, but what about meeting with some of the people at the bank who did the workshop? There should not be any charge for that. GL
    silverthreads

    Answer by silverthreads at 5:02 PM on Mar. 3, 2013

  • If you're sure thru who you want your loan, I'd just contact them and have all fixed per need basis. If I had huge choice of selection considering % etc. I'd fix it myself first , and polish the job later on working with particular bank etc.
    kujus04

    Answer by kujus04 at 5:44 PM on Mar. 3, 2013

  • Get copies of all three of your credit reports...these are free once a year. Look over all of the things that are causing damage to your score. Make sure that you pay every bill on time, and that you are paying more than the minimum payment on every bill. If there is anything on the credit report that is wrong, or that has already been paid off, start writing letters and calling people to ask to have them removed from your credit score. Pay off as many bills as you need to, and get down to only 2 or three that you are paying on regularly and don't owe too much on. You must have credit, but you don't want to have too much debt.

    I definitely wouldn't apply for a loan this far ahead. Every time you apply for a loan, your credit score takes a hit. Wait until you are ready to purchase to apply for a loan.
    ohwrite

    Answer by ohwrite at 6:52 PM on Mar. 3, 2013

  • The loan app counts as a credit inquiry, which lowers your credit score a little if you have lots of inquiries. This includes other creditors you don't even know about that perform credit worthiness inquiries for pre-approved credit card offers. Hence, why it's important to call the credit bureaus to opt-out of this kind of access. Your cc balances should be consistently relatively low or paid off at least 6 months prior to the home loan. Underwriters look for a history of responsible credit use and reliability of income sources. Get your free gov't credit report and fix any errors. The bank can't tell you what to fix unless they make a credit inquiry, too. I think you are referring to a Pre-Qualification. Pay off high credit card balances first, then anything else. Don't make any huge purchases for the next year.


     

    hellokittykat

    Answer by hellokittykat at 3:45 AM on Mar. 4, 2013

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