Tag Archives: credit report

7 Financial Habits That Will Make Buying A Home Easier

Buying a Home: Homebuyer FAQs re Mortgage Costs and Closing CostsGood credit is important in qualifying for a mortgage, but potential homebuyers with less-than-perfect credit can still get a mortgage. No matter what your score, these seven financial habits will make buying a home much easier:

  1. Paying your bills on time or early. This means paying all of your bills on time, not just the ones on your credit report. In addition to credit cards and loan payments, this means utility bills, rent and other regular payments that show you are a responsible adult. Ideally, pay your bills early. This is much easier now that we can access our credit card and loan accounts online.
  2. Pay more than the minimum balance due. If your minimum payment on your Target card is $50 a month, pay $75 or $100. This will reduce your total debt faster as well as the amount of total interest you are paying.
  3. Use less than 30 percent of your available credit. While it is helpful to have credit cards for emergencies, you want to keep your total balances under 30 percent of your total credit limit. For example, let’s say you have a Visa card with a $1,000 credit card limit. Don’t charge more than $300 on that card.
  4. Review your credit report for errors. This is a good habit to get into no matter how good your credit is. If you check your credit report annually, you’ll be able to identify mistakes and get them corrected before it is time to apply for a mortgage loan. See a mistake? Contact the original creditor right away and contact the credit bureau to dispute the information. It could take several months to clear a mistake, so staying on top of your credit report is helpful.
  5. Start building a credit history early. If you are in your early 20s, you ideally have established some credit already, whether it is an introductory credit card or a student loan. Start small by applying for a low limit credit card or getting a car loan with a parent as a co-signer.
  6. Keep paid off accounts open. The length of your credit history is important to a mortgage lender. Even if you don’t use that Visa card you got in 2010, and the balance is zero, keep the account open. It shows a seven-year credit history, and it will help lower your total debt-to-credt ratio (see #3 above).
  7. Set a budget and stick to it. With credit cards so readily accessible, it is easy to treat yourself with a nice dinner, a manicure/pedicure or furnishings for your man cave. But is this the best use of your money? Probably not – unless you budget for it. Set a monthly budget and only indulge in those little luxuries when you have the money to do so without charging it to a credit card.

These good money habits will help you position yourself to qualify for a mortgage loan when you are ready to buy your first – or next – home!

4 Ways to Improve Your Chance of Getting a Mortgage

Mortgage talk is HOT on everyone’s minds right now –  especially in the midst of the spring and summer buying season. Homes rarely stay on the market for long if they’re a hot buy — so here’s how to jump start your likelihood of getting a mortgage, so you can get the home of your dreams faster!

  1. Financial Literacy: Shopping for a MortgageCheck your credit report. Make sure everything on your credit report is accurate, and dispute anything that’s incorrect. Make sure you pay down any debt you have, and don’t rush to close old accounts. According to Realtor.com, 15% of your credit score is due to overall account length. The longer you’ve had a certain credit account open, and as long as that account is intact, it’s wise to keep it open.
  2. Get pre-approved for a mortgage loan. Getting pre-approved may not guarantee you a home loan, but it will help you get an “in” with your lender to show that you are capable of being fiscally responsible and are serious about buying a home.
  3. Don’t apply for new credit shortly after applying for a mortgage. This could affect your score, and down the road, lead to rejection of getting a mortgage. Lenders will see every time that you have applied for credit, and your even searching for it can register a ding on your credit file.
  4. Decide on the right type of mortgage. According to Realtor.com, the type of home you want, as well as assistance you’ll need, will help decide what type of loan you’re eligible for. If you’re a veteran, you could consider a Department of Veterans Affairs loan.  If you’re a first-time homebuyer, the FHA could help you out, and provide you with a 3.5% down payment. Daily Finance recommends to get your paperwork together. Your lender will want to see proof of income, assets, credit documents, and any other important documents showing you make what you say you make, and that you are who you say you are.

Have questions? Reach out to a local mortgage lender or ask an experienced Realtor for referrals. Happy Hunting!

 

Home Buyers: 10 Common Closing Costs

taxes 2When you’re planning to buy a home, you’ve already saved your down payment and maybe some money toward closing costs, but there are many costs that homebuyers don’t necessarily plan for, especially first-time homebuyers. Here are 10 common closing costs you should know about, compliments of the National Association of Realtors®.

  1. Earnest money. This is a 1 to 2% deposit you make to show that you are serious about buying a home.
  2. Escrow account. If you are putting less than 20% down, your mortgage company may ask for escrow to be sure you have enough money for taxes, mortgage insurance and other related expenses. Escrow is mandatory for FHA loans, and may be required by your lender for other types of mortgage loans.
  3. Origination fees. An origination fee compensates a mortgage lender or broker for its costs and services. It is usually around 1%, but this varies. When shopping for lenders, be sure to ask what they charge.
  4. Home inspections. Home inspections are an important part of the home buying process. Consider getting the entire home inspected as well as requesting specialty inspections like radon and pest inspections. Prices will vary.
  5. Attorney fees. Some states require an attorney at a closing. Though it is unnecessary in most cases, hiring an attorney can be beneficial in extreme situations.
  6. Credit report. You will likely have to pay the lender for ordering your credit report. Costs are typically in the $30 range.
  7. Additional insurance. If you are in a flood zone, you may be required to get flood insurance. Know the area where you are moving (or ask your Realtor®), so you can budget accordingly.
  8. Every home requires an appraisal to determine fair market value. Appraisals vary in cost, but typically range from $200 to $400.
  9. Title company. The title company charges a fee for doing a title search. Ask your Realtor® or lender for a referral.
  10. Occasionally, home buyers will want to hire a surveyor to determine where property lines are. Costs vary.

To estimate these costs, talk with your Realtor® and mortgage lender. Thanks to the NAR for this educational information!

 

 

Homebuyers, get a jump start on spring home shopping

Hand Shake PhotoSpring and summer are typically the busiest times of the year to shop for a home. Not only is the weather nicer, but it is often easier to move when children are on spring or summer break. With spring just a month away, here are some steps you can take to prepare yourself for the home shopping season:

  • Start interviewing REALTORS® to find one who is a good fit for you. We recommend choosing an experienced REALTOR® who is familiar with the community where you want to live and who has expertise in all areas of the home buying transaction.
  • Clean up your credit. Even if you have stellar credit, your credit report may contain errors or inaccuracies. Before starting the loan approval process, order your free credit report (every consumer is entitled to one free report each year) and check it closely. Report any mistakes to the appropriate credit bureau right away. This process can take months, so start now if you are planning on a spring or summer home purchase.
  • Get pre-approved. By accomplishing this step early on, you’ll know how much home you can afford and how much of a down payment you’ll need. According to the National Association of REALTORS®, the average down payment for homes is 6%, but you can find loans with down payments as low as 3%.
  • Budget accordingly. Once you’re pre-approved, consider all of the additional costs you’ll have to cover including moving expenses, closing costs, homeowner’s insurance, home warranty, etc.
  • Be prepared to make an offer. Once you begin shopping, your REALTOR® will show you new listings as soon as they come on the market. Be prepared to make time for a tour, know what criteria are most important to you (e.g., schools, neighborhood, # of bedrooms, acreage, etc.) and don’t delay in making an offer when you find the right home. In a competitive real estate market, some buyers come prepared for cash sales and others are willing to bump up their offer to secure their dream home.

By following these steps, you can put yourself in a good position to begin your home shopping. Have questions? Want to discuss a spring or summer home purchase? Contact your local REALTOR® for help.

Source: Realtor.com

7 Tips for Improving Your Credit Score

7 steps to improving your credit scoreIs your credit score impacting your ability to move to the home you’ve always dreamed of? Here are some easy ways to raise your credit score.

1. Watch your credit card balances. It’s easy to spend money on credit cards, but pay attention to how much credit you’re actually using compared to how much you have. If you pay attention to how small that percentage is, the better your credit rating could be. The smaller, the better. Keep your balance as low as you can.

2. Get rid of small balances on multiple credit cards. Charging one thing to one card and another to a different card can be harsh on your credit score. It’s better to pay off small balances on multiple cards and then figure out one or two cards that you can use for everything.

3. There is such a thing as good debt, and you should leave it on your credit report. Good debt is debt that you’ve handled well and paid off as you agreed to. If you have a good history of good debt, then your score is likely to be higher. You want to keep as much old, good debt as you can.

4. Shop for interest rates all at one time. When you apply for credit, there is the possibility that there could be a small dip in your score and that could last up to a year. The more you apply for credit, the more you want to use credit.

5. Pay all of your bills on time. This not only creates more ease, but it will help you figure out what kind of money you can save later on. You could have all the money in the world, but if you start to pay your bills late, that could impact a big purchase you have your eye on down the road – like your dream home.

6. Know that it takes time to improve credit scores. There’s no quick fix for a bad score, so pay your bills and wait it out.

7. Order your free credit report annually. Each consumer is entitled to one free credit report each year from each of the three credit bureaus: Experian, TransUnion and Equifax. Be sure to take advantage of this free service to monitor your credit, correct inaccuracies and discover identity theft. Go to AnnualCreditReport.com to order your free report.

Additional Resources: MyFico.com and Realtor.com