How does my credit score impact my purchasing ability?

If you’ve decided to buy a home this year, you may have some questions about how your credit score will impact your purchase ability. This is a common question for many potential homebuyers, so here, I will discuss some of the primary things that you’ll need to know once you start the homebuying process.

Credit scores and credit reports will affect a borrower’s ability to purchase a home in a few different ways. Credit reports are a footprint that allow banks to review a borrower’s credit history. The information found in these reports will give them the information they need to determine the level or risk they’re taking by loaning money to this person. The higher the credit rating, the lower the risk for the bank. The lower the credit score, the higher the risk for the bank. In addition, remember that your credit score will affect the interest rate of the loan you obtain.

Here are some helpful tips on how to bolster your credit score and secure a good loan on the home of your dreams.

  • Make on-time payments on all borrower accounts
    • Missed or late payments will negatively affect your credit score
  • Satisfy unpaid collections, judgements and tax liens (even if these are medical in nature, it’s ideal to pay them off or settle prior to purchasing a home)
  • Establish a credit history by opening a credit line. We are often taught that credit cards are bad. However, they’re essential for establishing a solid credit rating to borrow future funds. The key is to keep the balance below 30% of the allowed limit, always. It’s ideal to pay the balance off each month as well.
  • Minimize credit iniquities. Too many inquiries can cause credit scores to drop.
  • Don’t close existing revolving trade lines if they’re in good standing. When you close a credit card you lose the on-time payment history which influences your credit rating. (1)

The specific details as to what credit scores are needed to obtain a specific home loan:

– Conventional Mortgage: credit score of 620
– FHA Mortgage: credit score of 580
– Veteran Affairs (VA) Mortgage: While the VA does not have a minimum credit score requirement, Quicken Loans requires a 620 credit score on all VA loans. (2)

The bottom line: the better your credit score, the easier it will be to get a loan for your home. Contact me today for information on what it will take to embark on your journey in buying or selling a home.

 

  1. Information courtesy of: Aaron Hicks, Mortgage Consultant with Homestreet Bank
  2. Information courtesy of: Jevon Domench of Academy Mortgage Corporation
Posted on February 20, 2018 at 5:04 pm
Nancy Johns | Category: Home Buying Tips, Selling Your Home | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , ,

3 Home Buying Mistakes To Avoid

There are many facets of buying a home and the process can be a bit overwhelming at times. However, buying a home is very exciting and if you avoid various home buying mistakes, it will make your home ownership process one that is rewarding for many years to come. I recommend that home buyers avoid these three common mistakes when it comes to purchasing a house.

#1: Not working with a buyer’s agent.
A knowledgeable Realtor can help provide advice that fits your specific situation. An experienced buyer’s agent has worked with hundreds of different home buyers and they can help you understand what’s happening each step of the way. You’ll also be able to ask questions that may come up and your agent will also help you plan for closing costs and other costs that may arise. In addition, a buyer’s agent will help you know if a home is worth the price, what its resale value might be, and they will be your advocate when it comes to negotiations. When it comes to buying a home, you want someone on your side, and a qualified Realtor will be there the whole time.

#2: Not getting pre-approved.
Getting pre-approved for a mortgage serves dual purposes: it shows sellers that you’re serious and it also gives you a realistic idea of how much you can afford for a home. Work with a lender that you trust and gather up all relevant financial documents like pay stubs, tax returns, and bank statements. Your lender will work with you to get the information needed to provide an accurate pre-approval letter. Then, you can start shopping for homes within your budget.

#3: Not getting an inspection by a credentialed inspector.
A credentialed inspector will help alert you to any potential problems that the home may have such as faulty wiring, plumbing leaks, or structural issues. A layperson generally wouldn’t be able to spot these things, so when it comes to spending hundreds of thousands of dollars on a home, it’s worth it to pitch in a little bit extra to pay for a qualified and experienced inspector that holds proper credentials. Skipping that step could be costly, and you may end up paying for it later when you discover something major is wrong with the home.

If you’ve decided that you’re ready to buy a home this autumn, contact me today to help you get the ball rolling!

 

Posted on October 16, 2017 at 3:42 pm
Nancy Johns | Category: Home Buying Tips, Selling Your Home | Tagged , , , , , , , , , , ,

Reasons Why Fall Is a Good Time to Buy A House

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If you’ve been contemplating buying a new home, autumn is a good time to get out there and start shopping. Spring and summer are often busiest times to buy and sell a home, but fall is a great time to start house hunting for the perfect new house. Here are some reasons why autumn is a great time to start looking for a home.

Reason #1: The holidays are coming.
Before you know it, the holidays will be here in full swing. There will be Thanksgiving dinners to plan and prepare for, Christmas shopping to start, and holiday parties to attend. For some sellers, the upcoming holidays mean they are motivated to get the house sold so they can be out of their house before Thanksgiving and Christmas come rushing in. For home buyers, using this “pre-holiday” window of time could be an advantage, where you may be able to negotiate a deal and close quickly.

Reason #2: Home sellers are tired.
People who have had their homes on the market through the summer know that they may be losing their window of time to sell. Generally, sellers need to sell their home and if they’ve been sitting on the home sale for long, they could be more willing to negotiate, allowing you to get the home for the price you want. The longer the home sits on the market, the more room you have to negotiate.

Reason #3: Tax credits are available.
Every year, tax credits are available and closing on a new home by the end of the year could equal some great tax deductions. Some of these may include mortgage interest, property tax, or closing costs, which could counter balance your taxable earnings.

Even though the inventory of homes has been on the low side all year, there are still houses on the market right now. So if you’re interested in getting out there to find your new dream home, contact me for information! Still have questions on how to get started? I’ll help you work through all the details and before you know it, you’ll be settled into your new home.

Posted on October 2, 2016 at 11:14 pm
Nancy Johns | Category: Home Buying Tips, Selling Your Home | Tagged , , , , , , , , , , , ,