Chapter 7:       Now that I have decided to buy a home, what do I do?

1.  Review your credit

When you look for a mortgage, lenders will review your credit report. Your credit report is a history of how you have managed your finances and repaid debt. The credit report provides information on money you have borrowed and a history of your payments.  If you have a history of paying your monthly obligations on time, that's a signal to a lender that you are likely to make your monthly mortgage payments on time as well.  So your credit can be a factor in the kind of mortgage program you may qualify for.  Your credit history can also affect the amount required for a down payment, the amount of money you can borrow in relation to your income, and the interest rate you are offered.  But keep in mind that even if you have no established credit history or less-than-perfect credit, there are still loan programs that can help you buy a home.

Your credit history is pulled together into a credit report by three private companies: Equifax, Experian and Trans Union .  These companies sell your credit report to banks and other creditors so they can review mortgage and loan applications.

Most of the information in your credit report is deleted after 7 years (a bankruptcy is deleted after 10 years) and is continuously updated to reflect the latest information.

It's important that you look at your credit reports from each of the three companies to make sure they are correct. Your credit report may vary from one company to the other.

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