In global economic recession, some people think that buying a house is impossible, but some other people seem can conquer the obstacles. In fact, one of the ways to have a house is by knowing how to acquire it, as having a house is not merely because you are rich, but the ability to manage your financial is also needed since there are many average people can have their own houses. Hence, below article will tell you some keys of owning a house, whether for your living or for property investment.
- Improving your Credit Score
Having a credit will be best for securing a loan at the best mortgage rate. Jean Badciong, Chief compliance officer of Inlanta Mortgage in Brookfield, Wisconsin said that improving credit score would be the most important focus for all potential buyers. As a low score can make someone unqualified for an affordable mortgage rate and it can prevent someone from buying a home.
Moreover, Greg Holmes, director of sales and marketing for Credit Plus, a company in Salisbury, Maryland said that every potential buyer should request their free credit report at AnnualCreditReport.com. He continued his saying that everyone should check their report for accuracy and fixed any mistakes, even though it might take months to correct errors.” As what people think that they credit is okay, they actually may not, and vice versa.
In order to raise the credit score, buyers should make sure that they have no past-due bills. Besides, they should build a good loan record, such as pay every bill on time and reduce their balance to less than 30 percent of the credit limit on every account. Furthermore, it will be better if someone has three to five credit accounts, for instance, a car loan, student loan or credit card, for a year or more as it will boost your credit score. However, Holmes recommend against frequently switching credit card to get the best rate and there are some pitfalls that should be notice, such as paying bill late or missing a payment which can stay on your credit report for a long time
- Demonstrate Ability to Save
A future buyer should plan to create a simple budget and set a saving goal. The savings will at least be adequate as the capital for you to pay the down payment and moreover lenders want to see your pattern of savings, so keep your saving pattern steady. The buyers will need at least 3.5 percent for a down payment on an FHA loan or at least 10 percent for a conventional loan. To help you saving, it is better to set up an automatic transfer of funds into savings, once you get the payment from your salary.
- Clean from Debt
Increase the saving and reduce the debt is what lenders want to see. Lenders want to see that you can manage your debt and keep your credit card balances low, as this will make the lenders trust you to offer money. If you have a debt, make sure you finish it first, before you plan to buy a house. In fact, if your debt to income ratio is over 50 percent, you need to pay off your debt before even thinking of buying a home. However, some companies provide strong credit score or substantial cash reserves for borrowers, but commonly, FHA will only go up to 43 percent and conventional lenders will only go to 41 percent for the overall debt-to-income ratio.
- Get Educated
Do not think that you are too early to visit a lender, as it will be valuable for consumers to know if they qualify for a mortgage. Moreover, visiting open houses event will be very recommended even though your plan in buying a house still way ahead.