Credit & Your New Home Purchase

Credit Home Purchase

You don’t have to have perfect credit if you want to buy a home,

But,

Having a decent credit rating can certainly 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.

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 lender’s office with confidence and a sense of being in control.

Before you get started you should know that most people will find small blemishes in 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 every means in order to raise your credit score.

We offer a lot of free current information on our blog for that (;

For example, here’s a recent guide on how to build or re-establish credit.

Good luck and happy house hunting!

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