The First Thing to Do Before Buying a Home

The First Thing to Do Before Buying a Home
February 22, 2014 by Gerri Detweiler
Home prices in most parts of the country are just about as
affordable as they are likely to get, and mortgage rates remain super low. Together, those factors mean that many people are thinking about buying a home. Some will be first-time homebuyers, while others will be “boomerang†buyers who lost their homes in the housing meltdown but are now hoping to get back in. Still others may see this as the best time to upgrade to a larger home, downsize to a smaller one, or to move to the retirement locale of their dreams.

Whatever your motivation for buying a home, unless you are going to pay cash for the property, there’s one essential step you must take first: get your credit reports and credit scores.

The reason? Your credit scores will help determine what type of home loan financing you can get, and the
interest rate you’ll pay. You’ll want to have plenty of time to dispute credit report errors if you find any, and get them fixed. The last thing you want is to find out at the last minute that you can’t buy your dream home because of something on your credit report that shouldn’t be there.

If you will be buying and financing a home with someone else — a partner or spouse, for example — you’ll each want to get your credit reports and scores. Get them from all three major credit reporting agencies; Equifax, Experian and TransUnion, as they each collect their own data and don’t share corrections with each other. You can do this for free once annually at AnnualCreditReport.com. Beyond that, Credit.com’s free Credit Report Card is a tool that provides you with an easy to understand overview of your credit standing, along with your free credit scores, which is updated monthly. It’s a good and simple way to keep tabs on your credit regularly, because you’ll quickly be able to see if anything is amiss.