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Tips for Acquiring Conventional Loans

Tips for Acquiring Conventional Loans

Buying a home can be a daunting process, but with the right help to guide you through the process, you can find a conventional loan that meets your needs. As you begin looking for your perfect home, though, there are some things you can do on your own to get prepared and find the best loan or refinance possible.

1.  Improve your credit score – The best rates on conventional home loans goes to the borrowers with high credit scores. If you want a really good deal, you need to work to get your credit rating into the mid 700s if possible. For additional ways to improve your credit score visit: http://www.federalreserve.gov/consumerinfo/fivetips_creditscore.htm

2.  Correct errors in credit reports – Take the time to pull your own credit report and look at it very carefully. If there are any errors, get them cleared off as soon as possible. This should be done at least 60 days before you start the application process.

3.  Look at multiple options – Shop around before you sign any documents. There may be different rates available to you, either through different organizations or different types of loans, so make sure you know what others are offering before going with your first choice.

4.  Start planning early – Give yourself at least six months to prepare for this process. This will give you plenty of time to correct any issues on your credit report and start getting funds together for a down payment.

5.  Watch out for prepayment penalties – If you have a good credit rating, there is no reason at all to get penalized for paying some of your loan early. Always check for any kind of penalties or fees trying to sneak into the loan.

6.  Get pre-approved – If you find out how much you are pre-approved to receive, this can make a big difference in how you shop for a home. You will be able to select the best home that fits into your budget.

7.  Know your payments – It is important to understand how much of your income can actually be used on a house payment. The FHA caps most house payments at a certain percent of your monthly income, so make sure the monthly payments won’t be larger than the allowable amount.