Step Three: The Credit Information

It may be too late, and you may find that there are loans or other items on your report that you’ve never taken out. In addition, you may find that late payments are on your credit report when you’re sure that you made them on time. If you find such erroneous information, then you’ll need to send credit reporting agencies a letter explaining error, along with any proof or documents that you have that will back up your claim. They are required to investigate your complaint and report back to you with their findings.

It’s important to do all of this before you apply for a home mortgage. It will not only reduce amount of time that it takes to get an approval, but it could positively affect interest rate that you end up with.

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Finally—and perhaps most importantly—don’t get caught up in “house fever” and commit to buying more than you can afford. One way to do this is by being pre-approved by your mortgage company. This will tell you exactly how much you can afford to pay, and that will automatically slim down your options. A good rule of thumb when you’re shopping is that your mortgage payment shouldn’t exceed more than 36 percent of your income.

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