This week’s information comes from the mortgage officer in my office Kevin Carse - so credit where credit is due, thanks Kevin.
OK, could prices be any better and could rates be any better? If you are paying rent and have a good credit score, what are you waiting for ?
If you have decided to buy a home, the first thing you want to do is get a good realtor and get your mortgage going with a pre-approval or pre-qualified letter.
When you are going through the loan process, there are 10 “do’s and don’ts” to consider.
If you are thinking about buying a home in the future, and are not ready yet, it’s never too early to start working on getting your credit score up there. What used to be a good credit score a few years ago may not be enough now to get you into a home and a low interest rate loan.
Ten Do’s and Don’ts on Improving Your Credit Before Buying A Home
1. Don’t apply for a new credit card of any kind, even the pre-approval that we all get. When you have your credit pulled by a creditor or lender, you may lose points from your credit score.
2. Don’t pay off collections/charge offs during the loan process.
3. Don’t close credit card accounts. If you close a credit card account it will appear that your debt ratio has gone up. Closing a credit card will affect other factors such as length of credit history.
4. Don’t max out or over charge on your credit card accounts. This is the fastest way to bring down your credit score. Try to keep your credit card balances below 30% of the limit at all times.
5. Don’t consolidate your debt into one or two credit cards; it appears you are maxed out on that card.
6. Don’t do anything that will cause a red flag to be raised by the scoring system, such as new accounts, co-signing a loan, changing your name or address with the credit bureaus. The less activity on your reports during the loan processes the better.
7. Do check your credit. Sometimes something will show up that is a mistake and can be taken care of.
8. Do stay current on existing accounts, such as mortgage and car payments. Late payments can cost you points on your score.
9. Do continue to use your credit cards as normal; a change in pattern can cause a red flag.
10. Do contact your mortgage broker/banker if you receive something in the mail from a creditor or collection agency that you think may affect your score during the loan process.
Credit Score Range:
720 and up is excellent.
700 to 720 is very good
680 to 700 is good
660-680 is fair
640-660 is not so good
Under 640 is a poor credit rating.
When you start to plan to buy a home, speak to a mortgage broker/banker, get a good realtor who will work with you as a buyer’s agent, check your credit score so if you have some work to do to raise your score, you can start on that now.
This is all good information to have if you are thinking of buying a home now or in the future.