When you buy a home, consider it a voyage. There is real joy in the journey as much as the destination. In real estate, that couldn’t be more true! But as with any trip, you’d better be prepared before you hit the road. Just as you wouldn’t set off on any important trip without a map and itinerary and some hard cold cash, it’s best to make absolutely certain that you make the trip to a new residence as smooth as possible, by setting up a similar game plan.
This is a quasi-guest post by Lee B. “Doc” Compton, also known as the Credit Doctor. From personal experience, I know how hard it is to get a loan when you are self employed even if you have wads of equity. And if your credit isn’t ship shape, its going to be a tough road. I compare it to preparing to get pregnant, when you shape up, eat healthy, and make sure your body is ready for the stress of pregnancy, or so another Doc tells me. Getting a mortgage is actually similar. I asked Doc Compton for some tips:
With the recent sizzle in the DFW real estate market, and summer just around the corner, people are beginning to peruse the internet, and take Sunday drives through their desired neighborhoods in search of the perfect home. And whether they’re wide eyed first-timers, seasoned vets looking to upgrade or downsize, or investors capitalizing on current inventories and rate environment, they each need the same thing: good credit.
Dang good credit.
The first step is to ascertain exactly where you are. That’s as simple as looking at your own map, your credit report. Tons of websites offer consumer credit reports that are relatively inexpensive, and many offer a host of additional benefits, like credit monitoring and identity theft protection. The most important thing is the report itself, and that almighty credit score. These days, the minimum score necessary to qualify for the best loan products available is about a 640 (out 0f a MORTGAGE top tier of 850), but as is always the case, the higher the better.
Even if your scores are above that minimum threshold, you need to inspect your report for mistakes, and anything you don’t recognize. Studies show that millions of consumers have inaccuracies on their credit reports, many bad enough to prevent them from getting home loans. Candy, for example, tells me she had other people’s accounts on her near-perfect credit report. Inaccuracies can keep you from the best possible rates and terms. The good news is, there are federal laws in place designed to protect consumers from this type of misinformation. It can take four to six weeks to clear a credit report, so start early.Whether you take the necessary steps to correct your reports on your own, or hire a credit repair company to do it for you, you’ll see a long-term benefit when it comes to that final monthly payment.
Effective management of your credit is vital, too. Keep revolving (credit card) balances low, as the ratio of balances to available credit limits significantly impacts your score. Try to pay off in full each month, if possible. It’s also important to remember that most credit scoring models reward a good mix of credit use. For example, many loans actually require that you have some revolving history to be approved.
Taking a few steps to adequately prepare beforehand will make the journey to your next home mortgage clean and easy. If you have any credit repair questions, we are here to help: email questions to Candace@CandysDirt.com. and all credit repair questions will be forwarded for me to answer.
— Daily Local Real Estate Dish By Dallas Real Estate Insider — Candy Evans at CandysDirt.com