Pre-Qualification. It’s the First Step.

Pre-qualification is one of the smartest things you can do to help your home buying process run smoothly.

Getting pre-qualified is quick, easy and free. It gives you an estimate in advance of what loan amount you will be able to borrow and determine the loan type that’s right for you. Pre-qualification can even be done online. The lender will review your finances and estimate the amount of loan for which you may qualify. This pre-qualification is not guaranteed or considered to be any type of loan commitment…it’s simply a tool for you to know your borrowing power.

In addition, loan guarantees are offered on a variety of government sponsored mortgage programs and enable mortgage lenders to provide USDA mortgages. What is a USDA home loan? Well, this type of loan assists borrowers who would not traditionally be able to get approved. This loan means zero money down allowing financing up to 100% of the home’s value. USDA loans also provide very competitive fixed interest rates (never an adjustable rate mortgage) and affordable 30-year loan terms. This fixed rate guarantees that your monthly mortgage payments will never increase with a USDA home loan. The only fee associated the USDA rural housing program is a small, one-time funding fee.

So, all this being said, pre-qualification before you shop allows you to budget early on, and set your expectations on what you can afford…and what you might need to get out of your current home if you’re selling too. Once you create your budget and know about how much of a monthly house payment you can comfortably afford, your new home search will be more efficient. Knowing which homes are in your price range and the loan type you will need will save you time and allow your home buying expectations to be met.

If you’re in the search for a new home, I would love to help you! Contact me to get started today. I can help you not only sell your current home, but get you and your family into the home you desire! Connect with me on Facebook too!

Fixing Your Credit Score (Part 2)

Now that we have already determined how important a credit score is in obtaining a house at a reasonable interest rate lets discuss some of the ways to improve your score.  While there is nothing that you can do to fix it completely overnight there are a few things that you can start now that will at least show good faith efforts in working to improve your credit in the future.  The first thing you can do is review your credit score from all 3 agencies closely.  Unfortunately mistakes are not all that uncommon on a credit score so you will want to look for any incorrect credit limits, late payments, or collection issues that are not yours.  Sometimes just finding and correcting a few mistakes can improve your credit score quickly.

The next step to take in repairing your past credit mistakes is to pay down credit card balances.  While you may be saying, of course I would if I could, there is a quick way to accomplish this without making money appear out of thin air.  Borrowing the money from a family member or friend will obviously not eliminate the debt that you have but it does move the debt off of your credit card therefore giving you an instant boost in your credit score.

A more permanent and overall effective way to help pump up your credit score is by paying your bills on time from here on out.  Did you know that delinquencies have the biggest negative effect on credit scores.  In fact, having a bill that ends up going to a collection agency affects your credit score for a minimum of 7 years!  The best way I have found to keep this from happening is to set up automatic bill paying.  This way even if life gets busy, you go on vacation, or bill paying has never been your thing, you will be covered.

When it comes to credit cards there are 2 rules to follow: #1 is never max out your credit cards.  Even though the credit is there for your use it is actually better for your credit score to stay under 30% of your credit available.  In fact, if you need more money it is smarter to have 2 credit cards using 30% on each card than it is to just use one and max out the credit.  The second rule is to not close unused credit cards as it can actually lower your score because it essentially lowers your overall credit availability.  That is not to say that you should open more cards to obtain a higher amount of credit because chances are that will backfire.

If you are able to follow these simple rules when it comes to your credit score you should be able to raise your score in time to purchase the home that you have had your eye on.  If you have any questions about how your score may affect your next home purchase please feel free to contact me.  I’d love to help you find and afford your next home!