A home is most likely one of the most expensive purchases you’ll make in your life, and the process doesn’t begin when you tour your first property. Michael Ferraro Luxury Lifestyle Agent in Westport, CT, says that one of the first things prospective homebuyers need to do is get their finances in order. This real estate expert often educates clients about the importance of a solid credit score, as well as vitals such as down payments and mortgage rates.
To help you prepare to find your dream home, this real estate agent has shared how to make sure your credit is ready.
Getting Your Credit Ready for Real Estate Purchases
1. Know Your Score
Your credit score will have a major impact on your monthly mortgage payments, as well as your ability to secure a loan. Many conventional mortgage lenders will require a FICO score of at least 720, though those with a score of 580+ may still qualify for an FHA loan. Knowing your score will help you decide which banks to approach when looking for a real estate loan.
2. Review Your Credit Report
Your credit report provides a detailed account of your credit and financial history, including your amount of revolving debt and any late payments. It is used by lenders to help decide whether or not to approve your loan application, so make sure that there are no surprises on yours by pulling it a few months ahead of your house hunting journey. You can receive one free copy of your credit report every 12 months from each of the three major credit reporting agencies: Equifax®, Experian®, and TransUnion®.
3. Dispute Any Inaccuracies
When reviewing your report, make sure it is free from any errors that could affect your loan eligibility, such as any pending collections or account history. If there are any inconsistencies, file a dispute with the credit reporting agency you pulled the report from.
4. Relax Your Credit Usage
Opening new lines of credit, or reducing your debt-to-income ratio by making big purchases using your credit cards, can all temporarily lower your credit score. Once you’re six months away from applying for a mortgage, avoid putting any more stress on your credit score. Keep your debt utilization ratio above 30% and don’t open any new credit cards.
If you’re unsure about where to begin when assessing your finances for the home buying process, speak with Michael Ferraro Luxury Lifestyle Agent. As a lifelong area resident, he has intimate knowledge of the local real estate market and will help you find the right home to fit your lifestyle. Whether you want a luxury beach home or quaint rural cottage, this real estate agent will help you find your dream home. View active real estate listings online, or learn more by giving Michael a call today at (203) 448-7321.