When Helen and Thomas set out to buy their first house, they thought they were doing everything right:
- They got pre-approval for a loan before they even set foot in their first open house. But three months later, when they found a house they loved, the lending institution wanted new bank statements.
- Suddenly, they now had errors in their credit record. They had to fix them, and fast.
The lesson: Don’t assume your records are correct, check them regularly. And it’s not a bad idea to check those reports again if your house search drags on for several months.
In 2003 the Federal Financial Institutions Examination Council compiled data that indicated that 14 percent of loan applications on average were denied. Most denials involved insufficient credit, the inability to afford the loan and a loan amount that exceeds the house value.
Thorough preparation can make the difference between an easy going through the process or getting slowed down to a crawl. There’s nothing hard about applying for a loan. It just requires diligence, persistence and a checklist.