Buying a house requires having at least somewhat good credit and, the better your credit, the better terms you will receive. However, many people make a series of fatal errors that can prevent, preclude, or exclude access to credit, or at least decent credit terms for their mortgage. More often than not, these mistakes are made by not keeping the following three things in mind when buying a house.

1. Fannie Mae and Freddie Mac set the pace: Almost three-fourths of all mortgages issued in the U.S. are subsidized or supported by Fannie Mae or Freddie Mac. In the past, when the economy was booming and mortgages were being handed out like free samples, you could go to a different lender if you were turned down or did not like the terms you received. Today, however, you have to play the “FM” game. This means that you will have specific insurance, deposit, and income requirements, but it also means “extenuating circumstances,” a provision FM allows for, can be used to your benefit. That said, if you cannot meet FM’s minimum requirements for a mortgage, you should wait until you do.

2. There is a credit scoring spectrum: In addition, credit scores are treated with regard to various thresholds. As such, for example, the difference between a 3.5 percent loan and a 5.5 percent loan could be as small as 5 points on your credit score. The difference may seem small (e.g. 2 percent), but that difference would equal tens of thousands in interest over the course of a loan. In addition, you could be charged higher fees, be required to provide a larger down payment, or have to pay a mandated surcharge upfront.

3. Make one large purchase at a time: Lastly, when you are buying a home, make sure that you are only “in the market” for a house and not a new lifestyle. Regardless of whether your decision to buy is based on scoring a huge promotion with triple your previous salary or winning the lottery, when you buy more than one “large” item at a time (e.g. house, car, any loan, new credit card), you appear to be a higher risk and your credit score will drop, at least temporarily. No matter how short of a time your score is lowered, you will still be charged an interest rate to reflect that. Instead, make sure that you allow at least several months to pass between making this type of large purchase.

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