COMMON QUESTIONS
WHY IS CREDIT RATING IMPORTANT ?
Credit scoring or rating is the process whereby a lender determines how much of a risk you present .
Several factors are used to tabulate your score , including :
• Promptness or lateness of payment
• How much credit you carry
• How many times credit reports have been requested , and various other factors
To maximize your home buying power in the future , you should be concerned about your credit score . Some lenders may use less strict standards with excellent credit ratings .
MISTAKES TO AVOID BEFORE APPLYING
• Applying for additional loans or credit just before applying for a home loan
• Purchasing large ticket items
• Authorizing credit reports on your credit
• Using up all your cash reserves to pay off your debt
• Switching or quitting jobs just before , after , or during the application process
SHOULD I LOCK-IN MY INTEREST RATE OR “ FLOAT ”?
Interest rates on mortgages fluctuate daily according to the marketplace . At application , buyers have two choices : lock in the rate that is quoted , or “ float ” the interest rate , meaning the rate continues to move with the market . The benefit of a lock-in is you have peace of mind knowing what your mortgage payment will be from the time you are approved . With floating , you may be able to get a lower rate by waiting for rates to go down . Either decision should be based on your comfort level after you ’ ve carefully considered the money markets which affect interest rates . Most lenders will not allow you to lock-in until you have a property under contract . The best advice is to know the market trends and listen to advice from a lender you trust .
8 | THE BUYER ’ S EDGE | A GUIDE TO PURCHASING A HOME