One of the first steps to take before you even start to look at homes, is to know if you can get a mortgage. And one of the first things to take care of, is to know your credit score. This will be a big step in knowing if you can, or cannot, get a mortgage.
Get a copy of your credit report first. There are many ways to obtain this. You can contact the credit bureaus first, by law they are required to give you one free credit report per year upon request. Many of your credit cards will tell you your credit score when you pay the bill online. There are many web sites you can use, FreeCreditReport . com, CreditKarma . com and many more.
Check the credit score. Many people are under the impression that you need a score of 750 or higher to qualify for a mortgage. And that is not true. Many programs require a score to be a minimum of 620. And over 50% of mortgages are made to people with scores under 750. But you will get the best rate with a 750 score.
If you need to raise your credit score, here are a few ideas that may help.
Make your payments on time for your bills, such as rent, car payments, auto loans, student loans etc.
Try to keep your credit cards balances below 30% of your credit limit.
Look your credit report over, and try to correct any mistakes (yes, mistakes happen all the time).
Try to limit the inquiries into your credit file. Too many inquiries will lower your score.
And, if necessary, work with your lender or a credit counselor to raise your score.
But what if you have no credit? Well that is a separate issue you will need to resolve. Try to apply for department store credit cards. Sometimes they are the easiest to obtain. Or maybe try this. When each of my children turned 18, we went to the bank and took a one year Certificate of Deposit in the amount of $1000. We then used that Certificate of Deposit as collateral on a personal in the child’s name. Soon, the child had a good credit reference. If all else fails, possibly a secured credit card may help. You deposit some money with the credit card company, say $1000, and you can get a credit card with $1000 limit.
Once you have your credit in place, speak with a mortgage representative to get Pre-Approved. That way you know exactly how much you can afford. Then call a good Realtor, such as Bunny and Art Reiman to begin your search for your dream home. We can be reached at 732-598-7700. Or visit us online at www.BunnyandArt.com
