Advance Preparation For A Mortgage Is A Win

A client recently asked me what steps I would take to prepare myself to improve my financial health before applying for a mortgage application.

Ironically, he thought the question would leave me stymied and I would probably have to think at great length about what I would do, not realizing that this is every real estate broker’s dream: to have the ability to prepare clients (sometimes years in advance) to be ready for that mortgage application approval process when the time comes for them to buy their first home.

My answer to him, which might be of interest to everyone looking and even not looking, is that one should always be ready in the event of needing to apply for new credit, whether in the market for a new house, a mortgage, a car, or any other large credit purchase.

Here are the steps I would take:

One of the first priorities in preparing for a mortgage is to make sure your existing credit accounts are all in order and being paid in a timely manner.

Credit scores drive everything when looking for mortgaging or other credit purchases, and keeping your credit score high demands being meticulous about paying all your obligations prior to whatever dates the payments are due and making sure you follow this regimen each month without fail.

I have sat down with clients in years past and reviewed not only credit reports showing their payment histories, some good and some bad, but gone over possible paths of improving these credit scores in the future by following certain procedures to enhance whatever score they are showing.

Each person is different in their approach toward paying bills. Some are very particular in paying them immediately, and some are not quite as good about keeping track of the bills when they come in the mail, and may put them aside and then forget to pay them until the next one comes in, not realizing that they have now created a situation where their credit reports will show a derogatory late payment for that month when they put the bill aside and forgot to pay it.

This derogatory late payment will now affect their credit score on the credit report by lowering their score due to their lapse. And this is with one bill! What if someone took all the lates and put them aside, planning to pay them and then forgot and ended up with the same scenario the following month, but now with all or at least several of their creditors or even an existing mortgage being paid a month late? The credit agencies would report all these accounts as derogatory and late, and the cost to their credit score would be highly damaging.

So, the answer to my client about what should be his biggest priority is to be on top of everything that contributes to a high credit score on the credit report.

Paying bills before the due date is an absolute must for a good credit score, and if you’re one of those people who tends to put things aside and…fuhgeddaboudit, you should buy a calendar specifically for your credit obligations and post on your calendar not only the due date, but a week in advance of when they are due, so you can pay them with a week to spare to allow for a timely posting of the payment.

If your credit obligations are always kept up to par, you will always be prepared when new credit is needed! n

Anessa Cohen lives in Cedarhurst and is a Licensed Real Estate Broker (Anessa V Cohen Realty) with over 20 years of experience offering residential, commercial and management real estate services. You are invited to visit her website at AVCRealty.com. She can be reached at 516-569-5007 or send any questions or comments by email to [email protected].