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My credit isn't good enough to buy a home.....what now?

By
Services for Real Estate Pros with wideiphoto

1st off......who are you to say it isn't?  You definately need to talk to a mortgage professional and have a tri-merge credit pull done.  Why a tri-merge?   Banks will always look at all 3 of your credit scores and use the median score to determine your creditworthiness.

credit scores

2nd.......with banks tightening their lending guidelines it is getting tougher and tougher for people to be approved.  Most loan programs have a minimum score requirement to be eligible for approval.  Contact me for the latest in FHA and Conventional guidelines as they can change frequently.  Mark Schmitz Aurora Bank FSB 314.619.4321.

 

3rd.......even if you fall under the minimum score requirement don't give up hope.   Sure you may not buy tomorrow but with a little effort and some due diligence you can get your scores where they need to be to buy the American Dream.  One piece of advice....if you close out a credit card you lose ALL payment history associated with that card. This means, even if you've had this card open and made on-time payments for the last 10 years, when you close it, it's like you never had the card. You get NO credit for your pay history. Pay down BUT don't close credit cards. Closing cards with long pay histories will KILL your credit scores.  Credit repair isn't a difficult thing to do if you get assistance from the right company.  BEWARE never pay upfront fees for credit repair as that is illegal.  45 days after you begin is the normal timeframe to expect to owe for their services.  I have a great company I can recommend to you.

approved

4th......never ever ever never make any large purchases shortly before buying a home.  Always contact your mortgage professional first to make sure it won't negatively impact your debt to income ratios (determines how much home you can buy)

 

5th........always work with an agent who is knowledgeable in the area you are looking to buy in and use someone you trust and love to work with.  Afterall, the homebuying experience CAN and SHOULD be a fun experience.  It doesn't always have to be a stressful event.

Posted by

Mark Schmitz

Mortgage Professional

636.262.9712

Laura Reilly
Real Living Real Estate Professionals - Redding, CA
Home Sales Realtor - Short Sale Team Member - Redd

Good tips, I agree a little work sometimes and the buyers credit can soar!

Jan 26, 2011 02:29 AM
Diana Purcell
HomeSmart - Mesa, AZ
Delivering Dreams One Home at a Time

Good Advice, especially the 4th tip! I always remind my buyers to put off the big purchases until AFTER the closing!

Thanks for the post!

Jan 26, 2011 02:31 AM
Mike Saunders
Retired - Athens, GA

Mark - all great points. It seems so simple yet so many people don't realize the steps that they can take.

Jan 26, 2011 02:46 AM
Rick Kellow
Cherry Creek Mortgage - West Bend, WI
FHA & Reverse Mortgage Expert

Mark

It is good to see someone giving good sound advice... this the type of information all our buyers need

Rick

Jan 26, 2011 03:27 AM
Kathleen Daniels, Probate & Trust Specialist
KD Realty - 408.972.1822 - San Jose, CA
Probate Real Estate Services

Mark, you give great advice here. The entire real estate market including lending guidelines is ever-changing. What applies today … may not apply tomorrow. The key is to work with an experienced and knowledgeable professional and be guided through the process every step of the way.

Jan 26, 2011 06:06 AM
Cory Barbee
San Diego, CA
Broker (760) 563-4022

Great tips...many buyers and agents to not have this info...thanks for sharing

May 03, 2011 09:47 AM
Donald Reich
Madison Specs - New Rochelle, NY
Cost Segregation Specialist

Great tips. Homeownership is STILL the American Dream. Keep at it!

May 03, 2011 10:30 AM
Greg J. Gardner
Writer and Author - Black Friday - Banner Elk, NC
Writer and Author, RE Investor

I've found there's almost always a way to make a deal go through when you have a willing buyer and a willing seller.

May 03, 2011 11:01 AM
Diane Casale
Coldwell Banker First, Huntsville, AL - Huntsville, AL
REALTOR®, ABR®, CNAS®, SNP, Selling North Alabama
Wonderful blog and tips. Thanks for posting these tips. Not many people know what to do about their credit. thanks again.
May 03, 2011 11:31 AM
Virginia Dean
Keller Williams Tulare County - Visalia, CA
Real Estate Done Your Way

thanks so much.  I have several buyers who are working on their credit.  I liked this so it will show up on my facebook.

 

 

May 03, 2011 01:54 PM
Ron Tarvin
Residential, Investment properties, rehab projects, property management, luxury homes, new construction! - Katy, TX
Broker, Katy, Houston, Cypress 77450,77494,77095

I have a lender who works with anyone I send him and he doesn't tell people they don't qualify...he tells them they are not ready to purchase just yet and then lays out the path to purchase they have to follow.

If they choose to follow his path, they become ready to buy, whether that is 3 months, 6 months or a year from now...if they choose not to follow, then they are still just not ready to purchase yet.

 

May 03, 2011 03:51 PM
Ronald DiLalla
Century 21 Discovery DRE 01813824 - Anaheim, CA
No. Orange Cty Real Estate

Sometimes, they  just have to be a little patient and get assistance that can improve their particular situation.  I had one client that had to wait a year till their bankruptcy had cleared.

May 03, 2011 06:56 PM
James Sanson
REAL Broker, LLC - Tempe, AZ
REALTOR®

#4 is so important. I have seen buyers buy cars, etc when I even say do not pull your credit or do anything with your credit or you could lose you home- what do they do?

May 03, 2011 07:53 PM
Fernando Herboso - Associate Broker MD, & VA
Maxus Realty Group of Samson Properties - Clarksburg, MD
301-246-0001 Serving Maryland, DC and Northern VA

Five good reasons not to give up when trying to qualify for a home. .

May 03, 2011 11:21 PM
Cheryl Ritchie
RE/MAX Leading Edge www.GoldenResults.com - Huntingtown, MD
Southern Maryland 301-980-7566
That is a good point about not closing a long term credit card.
May 03, 2011 11:44 PM
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Thanks mark for the excellent tips for those that may be credit challenged. (Suggested for feature)

May 04, 2011 01:03 AM
Eileen Hsu
Douglas Elliman Real Estate - Manhattan, NY
LICENSED REAL ESTATE SALESPERSON

Having the ability to repair the credit and more than anything having an open mind that you need to be proactive about repairing the credit is the key.  These tips are an excellent road map to put yourself in the right direction. 

May 04, 2011 01:59 AM
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Mark, excellent tips for helping with improving those credit scores.

May 04, 2011 05:17 AM