Not many of us have the financial reserves to pay cash for a new home. Most of us must finance that purchase. If that’s your situation, we at ICI Homes offer some handy tips before you apply for a mortgage. If you’re not sure your financial health can withstand a lender’s examination, read on. Our five tips will help you whip your finances into shape before you buy a home.

Get Your Credit Reports

Your credit rating is the baseline that lending institutions will use to determine your mortgage eligibility. They’ll examine more factors than only your credit rating, but it will be Exhibit A. So, obtain a free credit report from each of the top three reporting agencies — Equifax, Experian and TransUnion — and see where you stand credit-rating-wise.

ICI Serena model at Tamaya

ICI Serena model at Tamaya

Plan, Budget and Save

Did you examine your credit reports and realize you have financial homework to do? The good news is you can whip your finances into mortgage-worthy shape. First, examine your income streams and spending habits. You know the expenses you can cut back (eating takeout every other night) and those you can streamline (not grocery shopping when hungry). Second, make a weekly and/or monthly budget and stick to it (allow an occasional ice-cream cone!). Third, channel all your extra or leftover cash into savings. You must make a down payment — the first money you’ll pay on your new home — when you sign all the paperwork to enact your mortgage. The more money you’re willing to put down, the less of a risk you appear to lenders.

Don’t Be Late With Bill Payments

Late charges and missed payments can really sully your credit rating. Don’t self-sabotage. Set reminders on your digital devices or tack handwritten reminders to the refrigerator door. Even better, schedule automatic bill payments online. Your payment history is a major factor as mortgage lenders determine whether to approve your loan application. Keep yours blemish-free.

Lines of Credit: Dos and Don’ts

Keep your lines of credit in good standing — with manageable balances and a stellar payment history — and avoid opening new lines of credit as you prepare to apply for a mortgage. A sudden flurry of new credit lines makes you appear a risky investment to lenders. Now also isn’t the time to make a really large credit-card purchase. And, apply similar restraint to paid-off or old lines of credit you no longer use. It’s tempting to cut those loose, but don’t. One, it reduces your overall line of credit, which can lower your credit rating. And two, your oldest line of credit spotlights longevity — a nice, long credit history that could be attractive to lenders. Wait until you’re comfortably ensconced in your new home before pruning your lines of credit.

Ready to start the search for your new custom Florida home? ICI Homes can help. Start here.