For those of you who are thinking about buying a home, whether it be in the next month or next year, there are several things you can do to raise your credit score and keep it in good standing. With the stricter guidelines for home loans, thanks to all the foreclosures from subprime loans, good credit is a necessity in buying a home today.
Tips to get your loan approved for good credit:
- Do not buy anything on credit -- not a car, couch or even a toothbrush; if you open new credit cards, keep the balances low and pay them on time; any credit cards you currently have, try to pay off as much of the balance as you can
- Do not let anyone check your credit, unless it is for a home loan and keep that to three companies -- each time your credit is checked your credit score, which can be anywhere from 350 to 850, gets points deducted from it; when shopping for a mortgage loan, you only get dinged once, but it must be in a timely time frame
- Contact a mortgage lender as soon as possible -- you may think just because you won't be buying for a year that it's not necessary; however, a lender will advise you on how to raise your credit, as well as ways to fix any negative credit you may have
- Register on https://www.optoutprescreen.com/ -- once registered on this website, offers for credit will stop coming to you and will help raise your credit a few points since you won't be tempted to open new lines of credit; once you own a home you can "opt" back in and get offers again, if you choose
- Check your credit report -- you may check your credit once a year for free and be able to make sure everything is correct and if not, to take corrective action
- SAVE MONEY -- the 100% financed loans are going away quickly; this is not to say they won't come back someday, but for the current and near future -- with the exception of some first-time buyer programs -- they are leaving; lenders will want to see at least two months of reserves in your savings to pay your mortgage should you lose your job or some other financial hardship, as well as money to put down on a home, which is a minimum of 3% of the purchase price of the home; also, owning a home costs a lot more than renting with regard to maintenance, taxes, etc...but the reward is much greater than any home you could rent
For more information, contact your bank or mortgage lender of choice.
Posted by Kim Jones