No more renting. No more giving your hard-earned money to pay someone else’s bills. No more being told how many pets you can or can’t have, or where you can or can’t park your car. No more sterile white walls and carpet. No more laundromats! Are you ready to buy a house? Do you want to be able to paint your walls any color you want? Do you want a yard for your children to play in with your pets? And to grow flowers or fruit trees or have your own herb garden? Do you want to own your own home?
You do? What is stopping you? Is your credit less than stellar? Good news! You can still buy a home! There are ways to repair your credit so you can finally own your own home. Do you have student loan debt? There is a program for that as well. First, clean up your credit, then get a mortgage company.
Do I Need A Mortgage Company?
Yes. Unless you can buy your house with cash, mortgage companies are there to lend you the money to buy your home. Of course, this comes at a price, it is called interest. They base the interest amount on your credit score. The higher the credit score, the lower the interest rate on the mortgage and the less you end up paying for the home in the long run. The lower your credit rating, the higher the interest, and you end up paying more for the home and your monthly payments will be higher. A good credit score is essential to buy a home and if you have bad credit, they may decide to not lend you the money at all. Then you will be stuck in the laundromat, again.
What is a credit score and what makes it good?
A typical credit rating is scored from 300 to 850. The higher the number, the better the score. A credit rating is a permanent record of sorts that records all of your payments you have ever made, including credit card payments, rent payments, water bills, cable bills, car loans, student loans and even medical bills. It will show what has been paid, what has not been paid, and if the payments were made on time or not. If they were not on time, it will show how many days late they were and if they are in default. Default means there were many missed payments and the loan had to be sent to another agency for collection. Oops! Didn’t you know there was someone keeping track of all that?
Afraid you may never be able to buy a house? Stop, it’s ok! Generally, a good credit score is 700 or higher but if your credit score falls well below the 700 mark, there are actions you can take to fix your credit and get a good lender. Most mortgage companies look at your FICO score, it must be 620 or above. Repairing credit may take some time but is well worth the effort. It could save you thousands of dollars down the line and you can do laundry in the comfort of your own home, in your pajamas.
To check your credit score there are websites like Credit Karma that allow you to check your credit score for free any time without negatively affecting your score. To achieve a high credit score you must pay all of your payments on time: rent payments, phone payments, credit card payments, all of them. And you must have credit cards. This website also suggests ways to increase your score, and even gives credit card choices you may be able to qualify for and, if you make timely payments, will help improve your credit.
Other ways to improve your credit rating
When checking your credit score you may find some discrepancies that may need to be cleared up to raise your score. Pay off any old unpaid bills that may have been overlooked or had been put aside to pay other, more important bills. Pay off as much debt as you can. Don’t take out any new loans or open any new credit cards in the months before you want to buy a house. Are you worried about student loans? There is a program to help with these as well.
What if my credit rating is still bad?
And if your score is still below 620? Don’t lose hope, there is still a chance! Contact a HUD-approved housing counselor, they will be able to help you find special programs in your area and help you find a home buyer workshop which is sometimes required to get a loan with bad credit. It can cost around $65-$99 and you will receive a certificate of completion. Start looking for FHA (Federal Housing Authority) loans through a mortgage company. To qualify for an FHA loan you need a FICO score of at least 560, a downpayment of at least 3.5% of the home, and an FHA-approved lender.
Looking for a Mortgage Company
You made it! I knew you could do it! Now you need to find a mortgage company that will take on FHA loans. First Choice Mortgage handles all types of loans, from conventional mortgages to VA home loans to USDA rural housing loans to, yes, FHA-insured financing. They even have FHA and VA streamline refinance, the simplest and fastest way to refinance! So, what are you waiting for? Finish folding your laundry and contact First Choice Mortgage now!