Let’s face it why should someone even want to repair their credit? Does anybody usually need more high-interest credit cards? Do they need a car loan for a car they can’t afford? No, the number one reason people want credit repair is to buy a home. Buying a home helps us turn that rent money into an asset. The problem is most people are not even aware of their credit score. If you want to buy a home it’s best you check your credit score and credit report at least a year in advance. This way you can be prepared for any deficiencies that may exist.
Make sure you go to Mint.com or these sites recommended by Credit Karma to get a free credit score. If you think you might need long term credit monitoring you should check out our special at smartcredit.com. Remember most of these sites use that Vantage scoring model which is pretty close to your FICO score most of the time. If you want that exact FICO score you should go to Experian’s site. To get your free credit report from all 3 bureaus to go to annualcreditreport.com. Make sure you download each one before moving on to the next credit report. Once downloaded you can review your credit deficiencies for dispute.
What is the best score for purchasing a house? According to this MSN article The Federal Reserve reported that 90% of US mortgages were by home buyers had at least a 650 score. 75% at least had a score higher than 700. The median score for home buyers was 759. Being above 740 puts you in the good range according to Experian. Don’t worry about getting into the 800’s usually the only people that high of a score have had home loans for many years.
Maybe you can qualify for a home at a lower credit score, but do you want to? The higher your score the lower your percent for your home loan and the more options for the loan and lenders. Working to get that APR down will lower your payments and make that purchase of a home that much easier for you.
Finding the right mortgage lender can be one of the most stressful and complicated decisions in the home-purchasing process. ConsumersAdvocate spent hundreds of hours analyzing and comparing different lenders, mortgage types, lender reputation & transparency, and customer experience among many other factors in order to pave the way for strategic homeownership with affordable monthly payments. You can check out the full guide here: https://www.consumersadvocate.org/mortgage-rate
I also recommend shopping around for a loan. Doing so can help you find a lower percent loan also. I usually recommend checking out at least 3 different lenders. Most lenders should be able to give a ballpark percent for the loan prior to running your credit report. Each one will run a hard inquiry on your credit report for prequalification so only get one prequalification letter. Each hard inquiry could hurt your score by as much as 3 to 5 points.
Get a total for what your closing costs will be also. Some lenders can add quite a few items on to the loan closing costs. Make sure the lender also puts that percent for the loan in writing. You don’t want him to try to change the rate as things get down to the wire while you are purchasing your home. Still, to be fair to them there is only so long they can hold on to a rate so as you shop for homes keep that in mind. Be aware of the dates of the Federal Reserves FOMC meetings to be aware of when rate increases might happen.
If you have questions about getting your credit score improve or optimizing your finances for buying a home please don’t hesitate to contact us, your credit repair agency in Utah Wasatch Smart Finance. Make sure to check out our article about making a budget and having one before you start credit repair.