Did you know that you could save thousands of dollars if you prepare your credit before applying for a mortgage? Your credit score is one of the most critical factors that determine your mortgage interest rate and which home loan program you qualify for.
This week’s article will show you how you can get your credit in top shape for your upcoming mortgage.
First off, know that your credit score doesn’t have to be perfect to buy a home. Several loan programs allow buyers with credit scores in the low 500s to purchase a home. However, you should be aware that with low credit scores typically come paying higher interest rates.
Because of this, we recommend you begin by checking your credit scores so that you’ll know how your credit health looks. You can get a free copy of your report from the three national credit bureaus: Experian, Equifax, and TransUnion.
When applying for a loan, you want your credit to look as good as possible. Taking on new debts would trigger another hard inquiry to your credit reports and lower the average age of your credit accounts which, in turn, hurts your credit score. Keep in mind that adding significant debt will also reduce your credit score.
Essentially, more debts and making large purchases during the loan application process will cause your lender to doubt whether you can afford to pay your monthly mortgage.
Lowering your credit card debt by paying down credit card balances leads to higher credit scores. Your credit utilization rate is the percentage of your available credit on your card. Keeping your it below 30% is ideal.
A payment history that shows late payments will negatively impact your credit scores. If timely bill payments are a problem for you, you can set alarms on your devices when your due date arrives or consider automated electronic payments with your credit card provider.
Lenders consider late payments a red flag which means your loan application may be declined or, if approved, it will be with higher interest rates.
Sometimes you may notice inaccurate information in your credit reports. Once you find things that you don’t recognize, you can file a dispute with the credit agencies so that they will remove the information or have it fixed.
It will take about 30 days for the bureaus to investigate and verify your claim. If the item impacts your credit score, removing or correcting it should increase your score.
Applying these steps may require time and effort but saving thousands of dollars is worth it. If you need assistance with your loan application, you can contact one of our helpful loan advisors today.
We've been helping customers afford the home of their dreams for many years and we love what we do.
Company NMLS: 328527
CalDRE Company Lic: 01131611
Pacific First Financial Real Estate Loans, Inc. is not acting on behalf of or at the direction of HUD/FHA or the Federal Government. This material is not from HUD or FHA and has not been approved by HUD or any government agency.
4015 Pacific Coast HWY, Suite 202
Torrance, California 90505
Phone: (310) 214-9299
Pacific First Financial Real Estate Loans strives to ensure that its services are accessible to people with disabilities. Pacific First Financial Real Estate Loans has invested a significant amount of resources to help ensure that its website is made easier to use and more accessible for people with disabilities, with the strong belief that every person has the right to live with dignity, equality, comfort and independence.
Pacific First Financial Real Estate Loans makes available the UserWay Website Accessibility Widget that is powered by a dedicated accessibility server. The software allows pac1st.com to improve its compliance with the Web Content Accessibility Guidelines (WCAG 2.1).
Pacific First Financial Real Estate Loans accessibility menu can be enabled by clicking the accessibility menu icon that appears on the corner on the page. After triggering the accessibility menu, please wait a moment for the accessibility menu to load in its entirety.
Pacific First Financial Real Estate Loans continues its efforts to constantly improve the accessibility of its site and services in the belief that it is our collective moral obligation to allow seamless, accessible and unhindered use also for those of us with disabilities.
Despite our efforts to make all pages and content on Pacific First Financial Real Estate Loans website fully accessible, some content may not have yet been fully adapted to the strictest accessibility standards. This may be a result of not having found or identified the most appropriate technological solution.
If you are experiencing difficulty with any content on Pacific First Financial Real Estate Loans website or require assistance with any part of our site, please contact us during normal business hours as detailed below and we will be happy to assist.
If you wish to report an accessibility issue, have any questions or need assistance, please contact us by sending an email to: email@example.com