Robin V. Wish - Real Living Suburban Lifestyle Real Estate



Posted by Robin V. Wish on 3/2/2020

One of the most critical aspects of your financial state, when youíre buying a home, is that of your credit score. Credit scores take your entire economic history into account. That means every missed payment, every account opened, and that three-digit number represents every debt you owe. Once you obtain your credit score and assess your finances, if you realize your score needs help, you may feel desperate. The good news is that youíre not helpless. There are plenty of things that you can do to raise your credit score in a short time to increase your chances of getting a better rate on a loan for your home purchase. Read on for some tips on how to improve your credit score.



Keep An Eye On Your Credit Card Balances


One of the most impactful factors on your credit score is how much debt you have. How much debt you have versus how much available credit you have is a significant factor in your score. If you pay your balances in full each month, thatís great. Keep in mind that even if you do pay off your balances that monthly balance amount affects your score as well. Paying off your outstanding credit card balances will have a positive effect on your score.


Remember Some Debt History Is Good


Once you pay off a car or home loan, it can be tempting to want these accounts removed from your credit history. When youíre getting a home loan, the lender wants to know that youíre reliable. If you can show that you have responsibly paid off other loans that can only be a positive thing for you and your credit score. Donít be so quick to remove old accounts that have been paid off from your report. 


Pay On Time


If you pay your bills on time continuously, it can only bring your score up. If our rating needs help, this could be the most critical thing that you can do to raise your score.


Keep Your Payments Equal Over Time


Keeping your payments equal means that you shouldnít start charging more than you usually would. You also shouldnít begin to make lower payments than you have been. Keeping your spending and payments consistent can help you to raise and maintain a good credit score.


If you know youíll be purchasing a home soon; you should check your credit score. If youíre not close to heading out on the home search, you can pull back a bit. While you always want to maintain good credit health, you shouldnít be so focused on your credit score that you forget about other things like saving for a downpayment. Know that your credit score is essential in buying a home, but understand that there are many moving parts when it comes to buying a home. 





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Posted by Robin V. Wish on 2/17/2020

Image by StockSnap from Pixabay

The perfect home is not the only thing you'll need to shop for when you want to become a homeowner. In order to get the best terms, the lowest monthly payment and a reasonable interest rate, start doing some homework now -- before you even attend your first open house. 

1. Check Your Credit Score

Checking your credit score should be the first thing you do when you're considering the purchase of a home. Why? Because every lender you speak to will use it as a benchmark for determining the likelihood of you being able to pay off the debt. The better your credit score, the more favorable terms and interest rates a lender might offer you. The earlier you know your credit score, the more time you have to address any issues that might be contained in it. Remember, you're entitled to one free credit report from each of the three reporting agencies each year. Take advantage of this service and keep tabs on your credit score. 

2. Have Steady Employment 

Being able to demonstrate that you are gainfully employed will go a long way toward qualifying for a mortgage loan and being offered attractive interest rates. Aim for at least two years of unbroken employment. Be ready to back up your claims regarding the duration of your employment and the dollar amounts you bring home. 

3. Offer a Sizable Down Payment 

Come to the negotiating table with a lender and with a solid down payment, you'll be able to enjoy lower monthly payments. There's no fast rule regarding the amount of a down payment. That being said, most lenders like you to have at least 20 percent of the home's purchase price as the down payment. There are some lenders, however, who accept less than 20 percent. If your lender accepts down payments that are less than the standard 20 percent, expect to have to purchase private mortgage insurance. This can be anywhere from .05 percent to 1 percent. 

4. Know Your Debt To Income Ratio

The debt to income ratio demonstrates your ability to pay off the mortgage as agreed upon. Most lenders like to see that your monthly debt payments are equal to or less than 43 percent of your gross monthly income. 

In a seller's market, there might be several people vying for the same home. Addressing the items above can make you look more attractive compared to some of the other potential home buyers. 




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Posted by Robin V. Wish on 6/3/2019

It's easy to get stuck without a mortgage approval or with a smaller home loan than you want, just because you don't understand how your credit score works. Most of the things you've done to prepare: budgeting your income, balancing your bank accounts and saving up for a down payment, aren't reflected in your FICO credit score. It doesn't even show how much you can afford.

So whatís the point of your credit score?

It tells your lender what youíve done with your previous credit. Whether anyone has been willing to lend you money, how long youíve kept it and whether you pay it back on time. They keep the actual algorithm at FICO secret, but there are two main factors that you can affect.

Late Payments

These are easy to understand and fix. Ready? Pay them on time. Thatís it. Each time you are late on a debt payment, whether itís a credit card, school loan, mortgage, or car loan it dings your credit score. Thatís the easy part. Now for some finance math.

Debt to Credit Ratio

Surprisingly, you are in complete control of this part of your score too. While it sounds like this is a ratio of how much you owe to how much you make, it's not. The debt-to-credit ratio shows how much you owe based on how much credit you currently have available. That means if you have a $5000 credit card, and your friend has a $2000 credit card, and you both OWE $2000, you will have a higher score than your friend because your ratio ($2000/$5000) is lower than hers ($2000/$2000). The higher this ratio gets, the less likely lenders are to give you more credit. Most professionals suggest you try to keep your usage below 30%. That means your balance on that $5000 credit card should stay below $1500. This practice works better for you as well, keeping some cushion in your accounts for emergencies.

Managing your Debt-to-Credit Ratio

There are a few tricks beyond merely using less of your credit to help keep this number under control. First off, pay off as much of your debt as possible. You want to keep that used debt down as low as possible when trying to apply for new debt. Second, don't close your paid-off accounts. While it may seem like the optimal thing to do, remember that total credit number? You want to keep that number high so that your used credit appears lower. So, you've paid off that credit card? Great! Now chop it up or put it in a hidden drawer and keep that available credit without using it. Lastly, be careful about opening new accounts. While it lowers your debt-to-credit ratio as long as you donít actually spend from them, your score also reflects the age of your accounts. The longer ago you applied for and got credit, the more likely it is you will qualify for new credit. Donít waste that new credit qualification on anything else besides your home loan.

Want to know the best lenders to apply with once you've got the best score? Ask your real estate agent for their top recommendations for your situation and use their expertise to ease the qualification process.







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