Whether you’re buying your first home or your fifth, when it comes to home buying you’re going to need a good credit report if you plan to finance any of it.
Your credit score is one of the most valuable things you own and it can quickly turn into bad news if you’re not careful. A low credit score will affect your ability to borrow money and may get you turned down for a mortgage loan. Alternatively, you may be offered a higher interest rate because the lender sees people with low credit scores as risky investments.
Many people don't know much about their credit score. If you are planning on buying real estate, you should prepare yourself ahead of time and build up your credit score. The following tips to improve your credit score should be helpful.
1. Credit reports aren't always accurate. Regularly check your credit report. Everyday we hear about thousands of credit cards being compromised through the hacking of large retailers' security and payment systems. These breaches can ruin your credit and be a endless headache for you.
If your personal information gets compromised, a thief will open up financial accounts in your name but not pay the bills. Those unpaid bills will work against you and affect your ability to buy a home. Keep a close eye on your credit score and your credit card accounts and report suspicious charges immediately.
2. Pulling your credit score may lower it. A "soft" pull is done yourself for personal reasons; it will have zero effect. A "hard inquiry" is when a lender pulls it up for loan approval. It will have a negative impact, but small.
3. A higher income does not equal a higher credit score. Income is not a relevant factor in establishing your credit score. Paying bills on time (or not) is what matters as well reducing the amount of debt you have.
4. Credit scores and credit reports are not the same. Credit reports are just one piece of the equation. Many factors go into calculating your credit score. The three big credit reporting agencies are Equifax, Experian and Transunion, and you can get one free credit report a year from each. Take advantage of this to protect yourself.
5. Debt settlement will not remove debt from your credit report. Debt settlement doesn't fix bad credit. Late payments, bad information and other negatives remain on your record for up to seven years following the first "infraction" date.
6. Cash-only payments does not build credit. You can't build good credit unless you use credit. Get a couple of small loans or credit cards and pay them off as you use them.
7. Closing your credit card accounts will not improve your credit score. Closing a card lowers your amount of disposable income: the ability to pay off other debt. You don't want to lower "credit utilization" by closing out a card.
8. Smart management of your various banking accounts is not reflected in your credit score. These are not reported to credit bureaus and thus have no impact. But smart management usually means you are paying your bills on time.
9. Dispute inaccurate information from your credit report. You can dispute mistakes in your credit report and should. A valid dispute will result in deletion of inaccurate information. A dispute of negative, but accurate, information will be a waste of time.
10. Missed payments will affect your credit score. Any missed or late payment can be reported to a credit bureau and probably will be. Do your best to pay your bills on time.
Follow these guidelines and we think you’ll breeze through any mortgage application process. ReMax at the Beach helps many buyers find the perfect home for them and at a price they can live with. Reach out to us if you’d like us to show you how easy it can be to find a new home and breeze through the mortgage application process.
Shopping for a new home can be exciting or nerve racking or both. Choosing your next home is a big decision so it’s important to arm yourself before you ever start looking. There is plenty of real estate for sale around Brunswick County and historical data indicates sales pick up in October.
When you find that perfect home that you can picture your family in for the next 5 to 25 years, it’s a great feeling indeed. But don’t let that feeling sweep you away into automatic mode.
There are critical things you need to keep in mind while continuing through the process of purchasing your home. When you’re working with us at ReMax at the Beach we’ll keep you focused on the end goal but it’s good to keep the following things in mind.
Checklist of Things to Know
___ Confirm that your budget will handle what your new home is going to cost you on a monthly basis.
___ Once you find your home, consider whether your furniture, electronics and appliances will all fit into the new home.
___ Research the local area around the home you’re considering. Understand the economics, climate and other variables that will affect you while living there long term.
___ If you have school age children, check out the local elementary, middle and high schools. Find out how your children will get to school and drive the route yourself.
___ Check out the neighborhood at different times of the day, especially at night. Are there sidewalks? Are the walks and street well lit? Is it a quiet area or are there dogs barking?
___ Evaluate possible repairs or immediate improvements you’d want to make. Include the cost into what you’re offering when you make it.
___ Do a practice drive to work from the new home. Then do it again during the busiest time of the day. Is it a realistic amount of time that you’re willing to drive five days out of every seven, twice a day?
___ Choose a professional home inspector to examine your property prior to purchase. Make your offer contingent on a satisfactory resolution for what they find.
When you’re ready to look at properties. Give us a call at ReMax at the Beach at 910-842-8686. We’ll stay by your side through all the steps of locating, purchasing and closing on your new home. We look forward to hearing from you!