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Our First Step
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My husband and I started out being very regretful that we had not got into the housing market a few years ago before prices skyrocketed in Southern California. We were beginning to outgrow our rental home as soon as our son was born and we knew that we needed to move into a different house, preferably one of our own. Building seemed to be the only option in which we could afford a home, especially one we'd want to live in.
Our first step was to clean up our credit from our irresponsible college years. At the time, our credit certainly was not good enough to lock in a construction loan. We spent hours everyday researching credit reporting laws, FICO scoring, disputing incorrect items and refinancing accounts to a lower interest rate. We also opened a credit card for the first time in five years to use and pay off in the same month so we could improve our FICOs. David and I became semi-experts in credit reporting and we probably annoyed our friends and family by incessantly offering to help improve their scores!
In retrospect, this was the most agonizing part of building (thus far). It was so stressful waiting for the mail in hopes of a credit rectification letter or trying to reach somebody at a huge corporation who could respond to a dispute. I feel like this was the most important step, not only because it helped us get a construction loan, but because after this, we approached everything hands-on.
A link to a consumer credit advocacy site This was a great resource for us.
Once we had six months of good reporting on our new accounts, we started shopping for loan companies.
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We're taking the same first step!
I just wanted to say that your blog is really inspiring to read. My wife and I have decided that we're going to purchase our first home, and thanks to this site in particular, it's going to be modern. Up until recently we just figured we'd have to settle for the standard off-the-shelf suburban home, but after discovering LiveModern, and the great information offered and posted by users such as yourself and the mods (Greg, Mark, etc.), we've decided that we're going for our dream home. So over the next two years we're going to do as you did and fix up our credit, scout for locations, plan, plan, plan some more, and finally, build. It's extremely exciting and once things get rolling a bit more we hope to post our own blog. Until then, I'll enjoy reading up on your progress and participating in this fine community!
Good luck!
Credit
For any other prospective homeowners:) Top three things that affect credit. 1. Late payments (over 30 days late hits report) and Collections/Judgements 2. Length of time accounts held open (the longer the better)even with zero balance (Dont close 'em) 3. When balance of card goes over 30% of credit limit - hurts score. From your Mod friendly Loan Officer