We hate to be the bearer of bad news, but at this point preventing identity theft is out of the question. If you have a Social Security number, your time is coming. Seemingly unimportant details of our identities are kept in file cabinets or databases around the country, or worse around the globe. Just to name a few risks, these records may be in:
- Student records where you attended high school, trade school or college.
- Employee files where you work.
- Anywhere you have ever applied for work.
- Anywhere you have ever applied for any sort of credit.
- Anywhere you have ever had a medical procedure performed.
- On a birthday calendar at your school, church, or workplace.
- In court, real estate, or voting records.
- Any Internet transaction.
By definition, identity theft is the use of someone’s personal information by another to commit any act of fraud. Identity theft is not just about credit cards, as the TV commercials might lead you to believe. Though somewhat overlapping, any identity theft falls into at least one of the following five categories:
- Drivers License.
- Social Security.
- Medical Records or Insurance.
- Character/Criminal.
- Financial.
You should determine what you can qualify for, and truly afford, before you actually start searching for a property. You will also want to review, and if necessary repair, your credit report before making any loan applications. This will save you considerable time and effort in qualifying for a mortgage.
Assuming a 20% down payment, and a moderate debt load such as car and student loan payments, you can generally afford a house worth about three times your gross annual salary. With no debt, you could possibly afford a house worth up to four or five times your gross annual salary.
Lenders typically want you to make all monthly payments using no more than 28% to 44% of your monthly income. In other words, if you earn a monthly income of $2,000, the lender will ordinarily want you to pay no more than $880 (.44 x $2,000) toward all your debts.
Loan processors will typically request reports and credit risk scores from at least two of the three major credit bureaus. The better your reports, the better you’ll score, and the easier it will be qualifying for a mortgage loan with good rates and terms. Never apply for a loan without knowing what each of the three bureaus will report on you.
You will need to at least pre-qualify for a loan. Unless you’re in a very slow real estate market, you will want to be pre-approved — that’s guaranteed – for a specific loan amount, pending only property appraisal, title report, and purchase contract. Pre-approval can be crucial in a very competitive market.
