Real Estate News for North Pinellas County

Archive for the 'good credit' Category

Improve your credit score before you buy that Pinellas County home

     What’s your credit score?
     You’re going to need to know the answer to that question if you are planning on buying a house anytime soon. The rules that govern mortgages and lenders have changed a lot in the past few years, and if you think getting a mortgage is going to be an easy process, you may end up disappointed.
     We all know that the relaxed lending practices during the middle of the last decade were a factor in the housing collapse. Lenders have tightened their procedures a great deal in response to that, and they are paying a lot more attention to the credit scores of prospective borrowers.
excellent credit      If you don’t have a credit score of 620 or better and at least a 10 percent down payment, you may be out of luck. A 720 credit score may not even be good enough.
     So, do these tighter rules make the Federal Reserve happier? You would think so, but that ain’t necessarily so. Federal Reserve Chairman Ben Bernanke recently told bankers that  “current standards may be limiting or preventing lending to many creditworthy borrowers.”
     So let’s say you have a credit score of 720, which is pretty good but not great. If your loan application for a 30-year, $300,000 mortgage is approved, you can expect an interest rate of around 3.70 percent. But if your credit score is more like between 620 and 639, your rate may be more in the range of 5.07 percent rate. And that rate will mean a monthly payment that is $242 more than at the 3.70 rate.
     Those REALLY low interest rates that you see advertised are not going to be available to you unless your credit is really good.
     But don’t despair. There are things you can do to raise your credit score, as much as 100 points in just one year.
     The first thing you should do, if you haven’t done it already, is do a little research into your credit score. 
  all three   There are three major credit score reporting companies – Experian, Equifax and TransUnion. You can get your credit reports from all three from AnnualCreditReport.com. It’s free if you don’t request it more frequently than once a year.
     Study those credit reports for errors, or for things that may have been left out. Next, you may want to sign up for a first-time homeowners class that is recognized by HUD (the federal Department of Housing and Urban Development.
     The two biggest factors in a credit score are payment history and the amount owed. Payment history accounts for 35 percent of the credit score, and amounts owed accounts for 30 percent.
     So raising credit card balances will raise your score. (NOTE: Don’t bother paying off credit cards that are already in collection – the notation that the account is in collection is what will lower your score.)
    HUD Late payments may stay on your credit report for up to seven years. But if you are apply for a mortgage, make sure there are no RECENT late payments – those can be killers.
     Also, you may get some of your creditors to report to credit bureaus. Landlords or utilities may have good things to say about your payment history, but they may not be reporting to credit bureaus. Make sure that they do.
      It may take anywhere from three months to 18 months to actually make improvements in your credit scores. But doing so can mean money in your pocket when you get your new mortgage.

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