Before
getting your home ready for selling, always consult a REALTOR®. Each
property is different and the following story should be used as a guideline
to get you ready for prepping your
property.
Get the credit you need to buy real estate. Qualifying for a real
estate purchase requires different credit than automobile financing
or retail credit.
If you plan to finance real estate, either as a home buyer or as
an investor, these credit tips will help you with your credit score
and save you money on loan costs.
14 Common Credit Mistakes to Avoid
Using expensive or undesirable types of credit
costs too much and is negatively scored.
Accumulating too many
lines of credit or too many credit cards causes credit report
remarks like "too much consumer credit."
Only paying
the minimum due keeps balances too high.
Being maxed out on any
credit card or line of credit causes deep drops in scores.
Taking
cash advances costs higher interest and extra fees.
Exceeding
limit and having to pay over-limit fees is a negative with creditors
and causes "high proportional
amounts owed" remarks
on credit reports and subtracts credit score points.
Paying a day or more late causes unnecessary late fees
and often increases interest rates.
Charging more than
you can afford causes a snowball effect of amassing debt with
no easy way to pay it
off.
Letting someone else use your credit, such
as co-signing a loan, raises your debt-to-income ratio
and possibly
adds "too many
consumer accounts" on your credit report, which
lowers your score.
Ignoring credit problems causes
unnecessary negative impact. Talk to creditors
before being late and make
arrangements. This action heads off negative reporting
to credit bureaus.
Failure to report address changes
to creditors causes misplaced bills and late payments.
Using
partial name, different names, initials instead of whole name,
or forgetting Sr. or Jr.
causes mix-ups.
Use your
full legal
name to protect you from confusion with similarly
named borrowers.
Failure to report name changes
to creditors also causes confusion.
Not checking credit report
frequently is one of the most common mistakes consumers
make.
You can buy real estate with poor credit, but you will save thousands
in loan costs if you maintain good credit. A bad credit report
leaves home buyers with non-prime loans which have higher point charges,
prepayment penalties, and higher interest charges, which therefore
cost more money.
For instance, a mortgage loan of $150,000, 30-year, fixed interest
rate of about 5.72 percent costs around $870 a month. Poor credit
scores raise the interest rate over 9 percent and the payments
over $1,200.
As you see from these payment differences, good credit means that
you can finance a more expensive house with the same income, or
save $330 each month.
Credit Requirements for Mortgages
Credit needed to buy real estate
is not the same as good credit. Besides your credit score, mortgage
lenders consider your debt-to-income
ratio and other credit matters, unlike other credit grantors.
Your debt-to-income ratio is the comparison of mortgage payment,
including
taxes, interest, and insurance to your total gross monthly income.
Real estate lenders also consider your employment qualifications
and your overall debt ratios.
Understanding the difference between good credit and the credit
needed to obtain real estate financing helps you buy houses!
Forget what you've been told about credit! Get the Credit You Need
to Buy Real Estate. Visit Real Estate Credit Help Center: http://www.recredithelp.com Subscribe to Credit Help! Tips electronic newsletter. Send a blank
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