7 Reasons Why You Need to Fix Your Credit!
Have you been thinking about fixing your credit? Did you know having bad credit can leave you homeless, without a job, and carless? Daily, more businesses use credit to make decisions about you and me, and if we do not start taking our credit seriously, we will be stuck using payday loans, renting, weekly car payments, and living paycheck to paycheck.
Here are 7 reasons why you need to fix your credit!
- Stop paying astronomical interest rates
When you have a lower credit score you typically pay higher interest rates and finance charges. When you have a good credit score you will be able to apply for competitive interest rate products, and you will save on the amount of interest you pay on accounts monthly.
- High-Security Deposits No More
Cell phone and utility companies all require a deposit when you have bad credit to establish service. These creditors do this to mitigate their risk of you defaulting. If you make your payments on time then the creditor will give back your deposit. What if you did not have to put a deposit down when you open an account? Could those monies be used towards your housing needs??
- No More Collection Calls
When you improve your credit score it includes paying off collection agency debts. The longer you put off improving your credit score means you will have to deal with the daily calls and letters from debt collectors. You can take action to place a cease and desist on phone calls, but that is just kicking the problem down the road!?
- Good Credit Score = Happiness
You have improved your credit score congratulations! Now you are not afraid to check it, but better yet you have the confidence to have someone else check it! That must make you feel great!
- Buy a Home
Are you wanting to achieve the American Dream? If so, having bad credit makes that dream a nightmare! Banks and mortgage lenders will not approve you for a mortgage until you fix your credit. A lender that does approve you with bad credit will charge you a high-interest rate, which will make owning a home very costly.
- Buy a car (Newer for sure!)
Dealerships, auto lenders all use credit to determine if they will lend to you. Without good credit, you will not be able to purchase a better car, and you will be stuck driving your current car that breaks down monthly.
- Land Your Dream Job
When you apply for jobs did you know that employers do check your credit as part of the hiring process? If you are applying for a government, financial, or executive job these positions will potentially require more information about your financial history.? Having bad credit could cost you this job and any future promotions you have been working hard towards.??????
Improving your credit can be an overwhelming process, and you may not know where to start. There are resources available to help you. If you have bad credit and want to buy a home, we are here to help you! Before you can start this journey you need to answer one question: Are you ready to make these changes in your life today?
If you are ready please schedule time with us to discuss the next steps with the link below:
Buying a Home can be Overwhelming.. But You Have a Friend in the Business
YES? it is possible to buy a home for your family, even if you do not know where to start! We are here to guide you.
Buying a home can be overwhelming and there are so many things you have to do before you can get your keys to your home.?
The very first thing you should do is find out what your credit score is. If you do not know what your score is you can get a copy of your report for free from annualcreditreport.com
Once you have your report look at the following items:
- Locate and know your score
- Are there any errors? For example Payment history, balance, date opened/closed
- Do you have any collection, charge off or judgment accounts?
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If there are any errors in your credit report you should dispute them to the credit bureaus. We found a free app that allows you to dispute your errors all in one place. The app is called UpTurn. We are still testing this app, but thus far we are quite pleased with the app. And you cannot go wrong with FREE!
If you?d like to talk to us about purchasing your first home, just leave a comment or send us a message!?
Why Credit is Your Secret Weapon in Getting a Mortgage
Do you know how important your credit is in obtaining a mortgage? It is the secret weapon that will put you at the top of the lender?s list to approve your mortgage. But you have to do some work to ensure that your credit is ready to take on a mortgage. Before you start the house-hunting process you need to have your ?Credit House? in order.????
There are three critical aspects of obtaining a mortgage; your credit report, the money you have allotted for the down payment as well as closing costs, and your income. Lenders want to paint a picture that encompasses all these aspects to make sure they minimize their risk and ensuring they are setting you up for success.
According to the American Bankers Association, less than half of all U.S. consumers know their credit score is or have reviewed their report in the last 30 days. Your credit score is the first thing a lender reviews and it determines if you get to go to the next step of the application process. TIP: Your credit score will determine your interest rate on your mortgage and what type of loan you will be offered.??
The next item is your down payment and monies you have saved for closing costs on your mortgage.? The more money you have saved towards both these will make the lenders? decision much easier to approve you. Yes, there are loans, such as FHA loans that only require 3.5% as a down payment. Closing costs typically run between 2% and 4% of the loan amount. For example, on a loan of $100,000, there could be between $2,000 and $4,000 in closing costs. On that $100,000 loan, you would have to have $3,500 saved for your down payment. TIP: There are down payment assistance programs available for first-time homebuyers.
The last but not least important item in obtaining a mortgage is your J-O-B. The lender is looking for the following: how long have you worked at your current employer, do you earn enough to pay the mortgage and your bills on a monthly basis, lastly are you able to save money after all your bills are paid. These are basic items lenders look at, but the lender could ask for additional financial documents. TIP: The more you can save the better your application looks to the lender and the better your loan terms could be.?
Once you have all these items to your lender they will then produce a pre-approval letter that you can use to find a home. The pre-approval letter will explain all the terms of your loan and the all-important dollar amount you are approved for your home purchase.? At this point, you are ready to go out and start looking for a home. TIP: Your pre-approval has a 90 to 120-day expiration, meaning if you do not purchase a home during that time the lender will have to pull your credit again.??
If you are ready to be a homeowner the first thing you need to arm yourself with is your credit score. Get your free annual credit report and know where you stand with your credit. If you need assistance or have questions feel free to reach out to us by email or call us at (812) 777-5850.??
How To Purchase a Home When You Have Less-Than-Perfect Credit
How To Purchase a Home When You Have Less-Than-Perfect Credit
While not having such a great FICO Score does make it a little trickier to purchase a home, but there are alternatives out there to help you become a homeowner. Keep reading to discover what you can do to become a homeowner even if your FICO Score is less-than-perfect.
Research government-backed funding programs
While standard financing programs normally have a minimum FICO Score of 620, government-backed mortgage programs - such as FHA, VA, and also USDA - tend to have looser credit qualifications. In each case, the Federal Government is the entity that backs your loan if you default, which assists lenders with their losses.
The minimum FICO Score for each loan type are below:
FHA: 500 - 579 FICO Score with a 10% down payment or 580+ FICO Score with a 3.5% down payment.
VA: VA loans have no official FICO Score requirements. Instead, each application is evaluated on a case-by-case basis. All though, the mortgage provider you select could have a minimum FICO Score requirement.
USDA: Like VA loans, USDA loans have no defined FICO Score requirements. While a FICO Score of 640 is required for a streamlined approval process, homebuyers with lower FICO Scores could be approved based upon extenuating circumstances.
Keep in mind that if you're looking at one of these options to purchase your home you should determine if the lender you are wanting to work with has extensive experience. Take your time and research the lender, and do not be afraid to ask questions.
Saving More Can Help You Get Approved
Keep in mind, your FICO Score is only one of the elements that are taken into consideration when obtaining a mortgage. Your yearly earnings, work history, as well as the amount of money you have saved - or the funds you have for your down payment and closing expenses - will certainly also play a role. If you have a lower FICO Score one of the best ways to get a mortgage is by showing your lender your savings. Tip: The larger percentage of your down payment to your purchase price equals LESS risk to your lender.
Take a Look at Portfolio Lending (Owner Financing)
If you don't qualify for traditional lending, your lender could offer you another option that is called Portfolio Lending. With portfolio lending(Owner Financing), your lender does not sell your loan to a third-party company like Fannie Mae or Freddie Mac, the lender will maintain your loan as part of their in-house portfolio.
Because your lender is not selling your loan to a third party, they can establish their own underwriting criteria. Additionally, be cautious about the terms the lender offers you. Lenders that provide portfolio lending typically offer higher interest rates, and could also charge more origination fees (Which have to be disclosed).?
Work with a Non-Profit that Provides Credit Services
If all else fails, you can always find a local non-profit to work with to improve your FICO Score. Do not be afraid to ask for assistance! With all the different pieces of information that go into your FICO score, it is hard to know what piece(s) will improve your score. Design a plan with your counselor that works for you, and provides clear milestones.
BONUS TIPS:
- Know your credit! Get a free copy of your credit report
- If you need help understanding your Credit Report?.Get Help
- If your FICO Score is at or above 620...Great
- Find a Lender that you want to work with. There are some great 1st-time home buyer programs out there. Here is a list of them by State
- Understand how much you can afford and what costs are part of your mortgage payment?
- Save for a Down Payment. As little as 3.5% of the purchase price (Grant options are available)
- Know what Closing Costs will be on your loan and have those monies set aside
- Start researching homes in your budget?
- Attend open houses and THINK?..Long Term
- Prepare to close on your new home and move
?BONUS BONUS TIPS:?
?FICO Scores below 620...Here is what you can do to supercharge your Score!
- Pay off any collection accounts. If you cannot pay off all at once start with the smallest balances. The others work with the creditor on a payment plan that works for your budget.?
- Judgments/Liens- Contact the Creditor to work out payment terms. The longer they are unpaid the more accrued interest you will have to pay.?