• Fixing Your Credit for Mortgage Approval to Buy a House •
You’re getting ready to buy a house. This could be your first home, and you’re anxious to get through the process or you’re selling your current home and want to get the best deal on your new house.
Whatever the reason, we have a few tips to help you improve your credit and close on your next home successfully.
1. Evaluate Your Credit Score
The first step in getting your credit in shape is to check it yourself. You can check your credit report for free annually from the credit card bureaus at Annual Credit Report. Go through it line by line and evaluate for any errors. Once you have identified an error, submit a dispute letter along with documented proof, and the credit bureaus are required by law to investigate within 30 days. A disputed error on an account will show on your credit report and may raise further questions for mortgage lenders, so be sure to resolve this far in advance of applying.
2. Pay Down Your Balances
According to Experian, 30% of your overall credit score is determined by the amount of credit you have used up versus the amount you have available. This is referred to as credit utilization and can greatly affect your score. Look over your current credit card balances and see which ones you can put some money towards or pay off completely to significantly boost your credit score.
3. Remove Debts in Collection
If you have debts that have gone to collections, this will show on your credit report and hurt your score. Before applying for a mortgage loan, contact the collection agency and work with them to “pay to delete” your debt. This involves fully paying off the current debt and any record of it being erased from your credit report. Be sure to confirm this debt has been fully removed from your account and contact the credit bureaus for any discrepancies.
4. Avoid Taking Out More Debt
Your credit score will be monitored throughout the process of applying for your mortgage, so don’t take out other loans during this period. Adding subsequent debt to your accounts will impact your credit score and could cause the mortgage lender to reconsider your loan. Waiting until after your application process is complete and you have closed on your new home will help you to maintain a solid credit score without jeopardizing your loan.
5. Don’t Close Any Accounts
Mortgage lenders will check your credit during pre-approval and once more before closing. That’s why it’s key to maintain the status quo in your credit and finances. That means withholding from closing any existing lines of credit. Doing so can reduce your credit score and increase your debt-to-income ratio—both key reasons for a lender to deny your final approval.
Why Your Credit Score Counts
Looking at your credit score can tell us how reliable you will be at paying off your debt. Each of these five tips will help get your credit in top shape as you prepare to buy your new or next home. When you are ready to make the move, be sure to explore how our offerings can help you win your dream home and pay for it in cash. If you’re selling and buying at the same time, check out how Reali Trade-In can allow you to move into your next home before your old one sells.
The Bottom Line
About The Author
Portia Green is a highly experienced full-time REALTOR® specializing in the representation of Sellers, heralded by her clients as data-driven and an effective negotiator. Producing $25M total in residential sales volume, Portia's goal is to help her clients achieve the best results when selling their homes and to make their experience an enjoyable one. She has successfully sold real estate since 2008 and has gained an in-depth knowledge of local real estate markets & seasonal trends. Portia has achieved a 100% customer satisfaction rating and wants to share her expertise & personal service with you in the sale of your home. When listing your home with Portia Green and Compass, you'll receive the hands-on service you need and desire. Portia will help you manage the entire process of selling your home from pricing, preparing and staging the house, to marketing, negotiating offers, inspections, all the way to closing. She will recommend skilled vendors for any job needed, personally host Open Houses, and ensure that all showings are accompanied. At Compass, Portia offers a wise no-nonsense way to sell your home for the best price and the least hassle. With a keen eye for staging & preparing listings to maximize Buyer appeal, all of Portia Green's listings are professionally photographed using HDR (High Dynamic Range) photography to provide the highest quality photos in the industry. Professionally printed marketing materials are prepared for all Open Houses. We also capture a 3D scan of your home that creates an interactive walkthrough online along with a custom-designed floor plan and targeted digital marketing campaigns on Google & the most popular social media channels. Compass participates in the Multiple Listing Service, which is the local real estate database of homes listed for sale that all REALTORS® use in helping their Buyers find houses. Your home will appear on every real estate website, in its best light, making a stunning camera-ready debut. Portia Green's home valuation expertise and extensive experience in comparative market analysis will help price your home accurately. She has refined her skills to help you pinpoint which features of your home will result in more showings and better results. Her mantra is for you to be ready to sell your home and feel good about that first. Portia knows that home inspectors always find a problem; that drones take some of the best photos in town; and that her eyebrows will grow to the floor in the time it takes her to read everything that's happening with your HOA, but that doesn't mean she won't do it anyway. Eyebrows be damned. You'll always need a place to unplug, connect, dream, grow, or just be yourself. That makes what Portia does even more meaningful. She’s ready to go the extra mile to help you find just the place. Whether you're selling your very first home, offloading an investment property, or want a vacation getaway with passive income, she is attentive to the details of every home sale. Portia helps busy people navigate this crazy real estate market like a pro, so don't be shy. Every great relationship starts with free advice and a friendly chat. Ask as many questions as you need to. Selling houses is her jam! www.portia.realtor
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