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Consumers Urged to Double-check Credit Report before Home Purchase

By Faye Mergel
Published: Tuesday, October 6th, 2009

The $8,000 federal home tax credit is due to expire in less than two months, which is why the number of consumers applying for home mortgage is increasing as deadline nears. However, experts warn that consumers may not get the lowest possible interest rates for them if they do not double-check their credit report prior to loan application.

Ideally, a person should check his credit report six months before applying for any loan, according to experts. But it is not yet too late for first-time homebuyers to check theirs and avail an $8,000 worth of tax credit. Housing experts say that homebuyers can still beat the Dec. 1 deadline if they retrieve their credit report from the bureaus as soon as possible. Once they already have it, consumers are advised to double-check it for inaccuracies and errors which could make them carry higher interest rates. Federal investigators say that identity theft is fast becoming a major factor in the accumulation of negative items across a person’s name.

If they do find fraudulent items, consumers are advised to file a dispute right away with the bureaus so they can be corrected. Specialists say that errors do not only lead to excessively high interest rates but also increase a consumer’s chance of getting a mortgage loan.

Specialists warn homebuyers that a credit report could contain more errors than what consumers immediately see. According to them, newly opened accounts and balances are just some inaccuracies that consumers ignore thinking that they own all of those. Experts note that even small errors such as a misspelled name could dramatically affect a person’s creditworthiness.

Housing specialists warn consumers that an unchecked credit report could lead them to sub-prime lenders, who typically charge 2 percent higher than regular rates. Payment delinquencies, which proliferate once a person’s identity is stolen, are very serious issues which experts say could ruin a potential homebuyer’s chance of finally getting a home.

Experts say that once a homebuyer already double-checked his credit report, he can start negotiating with a lender. Consumers are advised to look for as many creditors as possible in order to get the best deal. Experts point out that repeated third party inquiries from credit bureaus will not affect a person’s credit rating if those inquiries are done within a distance of few weeks.

Finally, homebuyers are reminded that home prices are 13 percent lower than they were in the previous year so now could be the best time to live the American dream.

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