Football season is pretty similar to buying a home – you just might be on the sidelines. And, if you are in fact on the sidelines to buy a home, there are things you can do to be ready when you do get back in the game.
Improve your credit score. Improving your credit score will help you qualify for the best mortgage rate available. Those mortgage rates are reserved for those with higher scores. Get a copy of your current credit reports from all three of the main credit bureaus: Equifax, TransUnion, and Experian. You can get them at AnnualCreditReport.com without paying for them.
Look over those reports carefully. According to the Federal Trade Commission, one in five people have at least one error on one of their credit reports which can lower your score or increase the cost or likelihood of receiving new credit. Identify and correct these mistakes. You can then send your dispute for that report to the credit bureau and also the business supplied the incorrect information. There won’t be a fee to correct it. You can get specific info for the process on each credit reporting companies’ website and from the FTC Consumer Advice.
There is a term call “credit utilization” which describes how much of your available credit on each revolving account is currently being used. If the limit on one card were $10,000 and you had a $5,000 balance, the utilization ratio is 50%. Amounts above 30% can negatively impact your credit score even if you do pay the balance each month.
Any delinquent items on your credit report will need to be cleaned up. Regardless of whether there is a legitimate reason, it needs to be explained to the credit bureau. Beginning in 2023, medical collections less than $500 will no longer be reported on consumer credit reports.
Always remember to continue saving for a down payment. Mortgages less than 80% of loan-to-value require mortgage insurance which increases the monthly payment. The exception to the rule is for VA loans which do not require it. The cost of mortgage insurance could add 0.5% to 2% or more to the payment.
Lower your debt-to-income ratio by paying off installment loans for cars, boats, and other things.
There are legitimate credit repair services available, however you might be able to get excellent advice from a trusted mortgage professional. You’ll eventually want to be pre-approved before you start looking at homes. Your real estate agent can make a recommendation to connect you with someone who will get you ready to get back into the game.
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