Jill Finkelstein - Compass



Posted by Jill Finkelstein on 10/25/2020

Image by StockSnap from Pixabay

The perfect home is not the only thing you'll need to shop for when you want to become a homeowner. In order to get the best terms, the lowest monthly payment and a reasonable interest rate, start doing some homework now -- before you even attend your first open house. 

1. Check Your Credit Score

Checking your credit score should be the first thing you do when you're considering the purchase of a home. Why? Because every lender you speak to will use it as a benchmark for determining the likelihood of you being able to pay off the debt. The better your credit score, the more favorable terms and interest rates a lender might offer you. The earlier you know your credit score, the more time you have to address any issues that might be contained in it. Remember, you're entitled to one free credit report from each of the three reporting agencies each year. Take advantage of this service and keep tabs on your credit score. 

2. Have Steady Employment 

Being able to demonstrate that you are gainfully employed will go a long way toward qualifying for a mortgage loan and being offered attractive interest rates. Aim for at least two years of unbroken employment. Be ready to back up your claims regarding the duration of your employment and the dollar amounts you bring home. 

3. Offer a Sizable Down Payment 

Come to the negotiating table with a lender and with a solid down payment, you'll be able to enjoy lower monthly payments. There's no fast rule regarding the amount of a down payment. That being said, most lenders like you to have at least 20 percent of the home's purchase price as the down payment. There are some lenders, however, who accept less than 20 percent. If your lender accepts down payments that are less than the standard 20 percent, expect to have to purchase private mortgage insurance. This can be anywhere from .05 percent to 1 percent. 

4. Know Your Debt To Income Ratio

The debt to income ratio demonstrates your ability to pay off the mortgage as agreed upon. Most lenders like to see that your monthly debt payments are equal to or less than 43 percent of your gross monthly income. 

In a seller's market, there might be several people vying for the same home. Addressing the items above can make you look more attractive compared to some of the other potential home buyers. 




Tags: buyer tips   credit score   Loan   planning  
Categories: Uncategorized  


Posted by Jill Finkelstein on 7/20/2020

Photo by bongkarn thanyakij from Pexels

Shopping for a new home should be an exciting experience, but if you are unsure of where you stand with your credit, it can be a little nerve-wracking. Having good credit will not only help you to secure more favorable interest rates for your mortgage, but it can also help you to avoid less favorable loan structures, higher down payments, and additional costs such as PMI. The best way to prepare yourself for your financing is to whip your credit into shape before your hunt begins. Check out three ways to help prep your credit.

Check for Any Collections

Collections are delinquent accounts that can seriously affect your credit score. Review your credit report and address any collections that are listed. If there are ones on there in error, file a dispute with the credit bureaus. If you owe the debt and can pay it, contact the collection company and ask if you can satisfy the debt by paying it and have it removed from the report. Finally, if you can not afford to pay the whole debt, discuss with the creditor possible settlement options.

Don't Request Any New Credit

When you open a new credit card or credit account, it can affect your credit in multiple ways. First, it will count as a hard inquiry, which can slightly lower your score, and secondly, it may change the average of your credit history. Mortgage companies don't like to see a lot of credit being acquired right before a mortgage is being established, so if it can wait, let it wait until the mortgage is secured. 

Pay Down Your Credit Card Balances

If you have the means to reduce the balance of your credit cards, now is the ideal time. Your credit score is affected by your credit card balances in two primary ways. The first being the amount of debt that is listed on all of your credit cards. The second is the ratio of the amount owed on your card in relation to the credit limit on the card. A good ratio is less than 30%, so to keep your credit score high, you will want to be below this percentage. Paying a large chunk of your debt can increase your score by several points, and also improve your debt to income ratio. Just be sure to do this at least thirty days out so that the new balance is reflected when your score is pulled.

Don't let poor credit lower your chances of buying the home that you always wanted. Follow the tips above to pump up your credit before applying for your next mortgage. Even a few points can mean significant savings. 




Tags: Mortgage   Loan   debt  
Categories: Uncategorized  




Jill Finkelstein