Considering all of the financial factors that must be taken care of and managed, purchasing a new home can be a stressful experience for just about anyone. One way buyers can make things easier is to setup a mortgage loan. Home mortgage lenders can not only offer purchasers the ability to raise funds to buy real estate, but existing property owners can also raise money to use as they need.
There are a number of different types of mortgages that can vary in many factors, including the size of the loan, maturity of the loan, the interest on mortgages rates, method of paying off the loan, and other characteristics. However, to receive help from any home mortgage lenders, an individual must have a good-enough credit score for the lender to feel confident they will be able to keep up with payments.
Typically, most lenders require a minimum score of 680 or 620 for a Federal Housing Administration loan, according to the Home Loan Learning Center. If you’re worried your score may not be up to par, here are a few tips for improving it:
- Paying bills: This is one of the most influential factors on a credit score, as well as one of the easiest pitfalls to fall into. Neglecting to pay bills, whether it be utilities or insurance payments, will have a huge impact on your score. It’s also unfortunately easy to fall into a routine of racking up delinquent payments overtime once you fall behind.
- Minimize credit cards: It’s easy to understand the temptation to rid yourself of those pesky bills by opening up new lines of credit to push paying them back without missing installments. However, the more credit cards you open, the more you may continue to rely on them, which will have consequences down the line if you can’t pay off the expenses on time.
- Fixing errors: Taking the time to sit down and clean up your credit history and fix any errors before applying for a mortgage is vital part of keeping a good credit score. You can do this by going through your financial history and finding any discrepancies in personal information, accounts you may not recognize that could potentially not be yours, and any present late payments were actually late. If there are problems, you can dispute them with the credit-reporting bureau or the home mortgage lenders.
Sure, this all may sound complicated now, but making a regular routine of checking and maintaining your credit score can eventually become second nature. Otherwise, bad credit home loans could leave you with high interest rates. But home buyers applying for mortgages can actually help counteract low credits scores with higher down payments if handled correctly.
Taking a few minutes out of your day here and there to clean up your credit could help you buy the dream home you’ve always wanted.