One of the most frequently asked questions asked by a first-time home buyer is, "Where do I get started?". If you're hoping to make a new home purchase in the future the first task you should complete is applying for a checking account. This blog post will help you understand why having a checking account is required for a loan qualification.
While there are many things that you will need to accomplish in order to achieve a mortgage loan qualification, establishing a credit history should be at the top of your to-do list. By opening a checking account you are starting to create a credit history. Credit history significantly impacts your overall credit score and credit worthiness. It is important to establishing a credit history as soon as possible as your length of history is equally as important as your positive history.
When applying for a mortgage loan, a lender is typically going to want to see a credit history of the past 3 months (minimum). This allows the lender to see what you earn, what you spend, how you spend, payment history, deposits, withdrawals, etc. to help them determine whether you're the type of borrower they want to lend money to.
There are rules when it comes to lending... a lot of rules. Be sure to ask your lender early on in the process what is acceptable and what is not acceptable in terms of your checking account activity. For example, some loans do not allow you to be "gifted" money. Therefore a big check deposited into your account from mom and dad for the downpayment right before closing could be a big no-no and put a stop to your home purchase.
Applying for checking accounts can be done at banks or credit unions at branch near you or many will also accept online applications as well.
