Buying A Home

Buying a house you should have:

• Sufficient income to support the monthly mortgage payment.
• Enough cash to cover the down payment (check into low or no down payment loans).
• Sufficient cash to cover normal closing costs and related expenses.
• A good credit background that indicates your payment history or "willingness to pay".
• Sufficient appraisal value, which shows the house is at least equal to the purchase price.
• In some instances, a cash reserve equivalent to two monthly mortgage payments.

Financial Situation considerations looked at by Mortgage Lenders:

26% - 28% of gross monthly income – Conventional Financing
29% of gross monthly income – FHA Financing

Maximum allowable monthly housing expense and long-term debt

33% - 36% of gross monthly income – Conventional Financing
41% of gross monthly income – FHA Financing

PULL A CREDIT REPORT ON YOURSELF
Important information from the Federal Trade Commission, the nation's consumer protection agency: annualcreditreport.com is the ONLY authorized online source for you to get a free credit report under federal law. You can get a free report from each of the three national credit reporting companies every 12 months. Some other sites claim to offer "free" credit reports, but may charge you for another product if you accept a "free" report.

Protect Your Credit Rating
Lenders use credit reports to decide whether to loan money. Insurance companies, landlords and employers also check credit reports. A report that shows defaults or late payments- even 30 days late-can mean not getting a loan or paying a higher interest rate.

• Pay all bills on time.


• If you're having trouble paying bills, get advice from a reputable nonprofit organization before you become delinquent.


• Check your credit report every year.
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• Alert the credit bureau if you see errors in your report.


• Avoid spur-of-the-moment purchases.


• Set a monthly limit on credit card charges. Prepaid Cards are best.


• Pay more than the minimum on your credit card bill.


• Utilize Layaway instead of using a credit card

Addresses / phone numbers of the three major credit bureaus:

Equifax (CBI)	Experian (TRW)	Trans-Union
PO Box 740249	(888) 397-3742	555 W. Adams
Atlanta, GA 30374		Chicago, IL 60661
(800) 685-1111		(800) 916-8800

When you apply for a mortgage loan, you expect your lender to pull a credit report and look at whether you've made your payments on time. What you may not expect is that they seem to be more interested in your "FICO" score.

In short, lower credit scores require a more thorough review than higher scores. Often, mortgage lenders will not even consider a score below 600.

Some of the things that affect your FICO score are:

• Delinquencies
• Too many accounts opened within the last twelve months
• Short credit history
• Balances on revolving credit are near the maximum limits – keep to 1/3 of you limit.
• Public records, such as tax liens, judgments, or bankruptcies
• No recent credit card balances
• Too many recent credit inquiries
• Too few revolving accounts – two is good, three is better, see next item.
• If you need revolving credit without the risk, use a prepaid card: Prepaid Credit Card Listing which reports to the credit bureaus and shows you are responsible with your money.

BEWARE THE "MINIMUM PAYMENT" TRAP:

It would take 61 years to pay off a $5,000 credit card balance if you make only the minimum monthly payment. You would pay almost $16,000 (Assuming a 14% interest rate and minimum payment of 1.5% of the outstanding balance) in interest! So it is wise to pay of your card with the highest interest rate.

Credit Repair Letters

Validation Letter to Creditor

Federal Trade Commission: Building Better Credit Report

Federal Trade Commission: Credit Repair Scams