CREDIT AND BUYING A HOME
You don't have to have perfect credit if you want to buy a home but having a
decent credit rating certainly does help! The better your scores are the easier
the process will be and of course, you will be eligible for better terms on a
home loan.
Before you see a lender it is always a good idea to get copies of your credit
reports and see exactly what you have listed there. This website will show you
how to get copies of your credit reports and also how to deal with issues that
you may find on your reports. It's a great idea to prepare your reports for the
scrutiny of the lenders. If you do you will be able to go to the lenders office with
confidence and a sense of being in control.
Before you get started you should know that most people will find small blemishes on their reports and that mistakes can usually be fixed without too much hassle. For instance, a credit card that you allowed to lapse with a $10 balance is easy to deal with. These types of issues will not stand in your way of getting a loan.
Here is a list of what lenders don't want to see on your credit report
- Too many late payments
- Too many credit inquiries
- Overextended credit
- Liens
- Paycheck garnishments
- Bankruptcy
If you have filed for bankruptcy you are going to have some problems. A
bankruptcy can stay on your credit report for up to 10 years and if you plan to buy a
home with a bankruptcy on your credit you are going to most likely lose some sleep over
it. Commercial lenders will most likely not help you and so you will need to
find a mortgage broker who specializes in hard to finance situations.
Keep in mind that if you can get a loan it is going to cost you a lot to get
it. You can expect much higher down payment requirements (20 to 35 percent) and
you will pay a lot more in interest than a borrower without a bankruptcy. If
you are in this situation I would suggest that you spend the time that you are
waiting for the bankruptcy to come off of your report establishing and taking care of
new credit. Seriously, bankruptcy is not the end of the world but you are most
likely going to have to put some things such as home buying on hold so use your
time wisely. This website will provide you with some great tips for
establishing new credit and for getting yourself credit worthy for future home
buying.
The main thing that lenders will be looking at will be your credit scores. A
credit score is a number between 400 and 700 that lenders look at in order to
determine your credit worthiness. Your credit score is made from information
from your credit report regarding delinquent bills, outstanding debts, the
number and amounts of balances you owe your creditors, your credit history and
what types of credit you have. Your credit scores will determine what kind of
interest rates that you will pay for a loan. Obviously, people with higher
scores enjoy better interest rates. You can learn all about credit scores and
how to punch up your scores right here on this website.
The magic number is 620. If you score above 680 you are considered a premium
borrower and the lenders will love you. If you score below 620 you will
probably be rejected and you need to utilize this website, luckily this website
is free to use!
Good luck and happy house hunting!!
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