Misconception 1: Pulling my credit report will hurt my credit score
Pulling your credit report does not hurt your credit. It may reveal you have bad credit but it will not hurt your credit score. In fact the Fair Credit Reporting Act passed in 1970 entitles you to one free credit report per year from the three major credit agencies, Experian, TransUnion, and Equifax.
You can pull this free credit report at, annualcreditreport.com and should do so once a year to ensure it is still accurate and your identity is secure.
Misconception 2: If I am denied a home loan from one lender I am unable to get a home loan from any lenders
You may still be eligible for a home loan even if declined by one lender. You see loan officers get your financial status in the application you complete for them. They then take your specifics and see if there are any loan programs they offer that would work for you.
If they do not have a loan that fits your needs then they say you are declined. You may like to keep shopping in this scenario as other lenders may have something that your situation.
Misconception 3: Applying for a loan can hurt my credit score
If you are applying for a loan this should have no effect your credit score. It may however, reveal any problems you might be having with your credit.
You should be able to apply and even reapply for loans without effecting your credit score. In fact many lenders actually want to help you improve your credit so they can do business with you. So some even offer free credit counseling services.
Misconception 4: The loan with the cheapest closing costs and or lowest monthly payment is the best loan
It is easy for lenders to work the numbers and make their loans look like they have fewer fees than other lenders. You have to be careful as they may be adjusting the monthly payment and rolling some fees into the loan itself.
Before picking your loan you want to see all fees associated from start to finish and how they are accounting for them. Sometimes paying more up front means you can get a lower monthly payment.
Misconception 5: My credit score is perfect so I should qualify for a loan without any problems
Your credit may still have issues even if you have never had a problem before. There can be typos and miss-filings on your credit report reflecting poorly on your credit. Lenders also look at other factors in addition to credit such as employment history, and debt to income ratios.
You really need to talk to a lender before doing anything in Real Estate. You can apply for a loan in a few short minutes. Once approved you will receive a pre-qualification letter that is required when buying a home. So the first item on your checklist should always be to contact a lender before shopping for a new home.
Misconception 6: HOA and other housing dues do not factor into financing
When financing a home in a home owner’s association the HOA fees do factor into your debt to income ratio. Make sure to figure this into your equation when buying a home. Your lender should show you a maximum monthly payment you can qualify for. Call your lender and have them factor in these costs when figuring out if you can buy the home.
Misconception 7: I have never taken out a loan before so I have a bad credit score
You really have to check your credit score to know how you credit is. You may be surprised to find your credit is not all that bad after all. If you have paid your bills on time and managed your credit cards responsibly then there is a good chance you have a decent credit score. You can pull a free credit report at, annualcreditreport.com
Quick credit score improvement tipDon’t burn up your credit cards. It’s an ironic truth that credit agencies look favorably on people who don’t use the credit at their disposal. Save you credit cards and pay them all off. Then continue to use one each month paying the balance off at the end of each month.