Friday, October 25, 2019 / by Connie Tracy
Pre-Approval Credit Check
To get a loan to purchase a home, you'll go through a pre-qualification process. You'll let your potential lender know a variety of financial information, from your credit score and employment to your marital status, as well as any number of factors that can impact your qualification. With this self-reported information, you can then be pre-approved. After that, lenders will verify the information you've provided and this is when they will pull your credit history. It is important that what you've reported matches the credit information pulled by the lender- which is why you shouldn't miss any payments or open new cards during this time. Lenders offer approval based on a risk assessment, and you do not want them to think that your are a risk.
2. Credit Check at Closing
The main concern of the lender is the risk you pose to them. Because it can take time for an offer to be accepted, your lender may pull a second credit check while waiting for your loan to pass underwriting. This is to ensure your credit hasn't changed since the initial credit check. If you took out a loan or created massive credit debt, you could change your debt to income ratio and your lender could decide you are too risky to loan to. This is why it is so very important to keep your credit in check before, during, and after the home-buying process!
3. When You are Building your Dream Home
Building a home takes time. Generally, it takes 9-12 months to complete a new build. During that time, you have to keep your purchases to a minimum. Your credit will be checked every 4 months. Remember, no BIG purchases during this time. Wait until you close on your home before you purchase a new living room set.