Frederick County Short Sale Blog | Homes for Sale in Frederick Md

Avoid These Two Mortgage Pitfalls

Getting through the mortgage process can be tricky these days, so being as prepared as possible is vital. The biggest mistake many first-time homebuyers make is not getting their financial house in order before they start looking for a home.

Here are two very common misconceptions:

1) I have always paid for everything in cash or with a debit card, so I have never had a late payment on anything. I am good, creditwise, right?

 Your credit history is usually the most important single factor in determining whether your loan is approved and at what interest rate it will be, but you need to have a history. If you pay for everything in cash or with a debit card, then you aren't doing anything to establish your creditworthiness.

You need to get credit, even if it much be with a secured or high interest rate card, and make payments on time.

2) I have been able to get credit whenever I applied for it, so I don't need to check my credit report, right?

Getting a mortgage is different from getting other types of credit, especially these days when lenders are ultra-picky. You should make sure that there are no errors on your credit report that can lower the score derived from it (which is what lenders look at).

Check your report for inaccurate information and get mistakes corrected will in advance of applying for a mortgage.

You should check all three credit reporting companies -- Equifax, Experian and TransUnion -- to see if your report contains inaccuracies or omissions.

Common errors that can hurt your scores include: not clearing a balance when a loan has been paid off, listing accounts you're not responsible for or failing to include a credit account. 

You are entitled  free report for each of the agencies every twelve months. Go to www.annualcreditreport.com or call 877-322-8228. If you find an error, you will need to dispute it. The Federal Trade Commission website tells you how to dispute errors.

~ Thanks Mike G. from M&T Home Mortgage for a great guest post!

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The Highland Group