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Boost your Credit Score

Boost your Credit Score to Buy a House

By Charles L Harmon

It is reassuring to know that the large sum of money you bring into your home every month is an investment. If you have poor credit you need to boost your credit score so you can invest your money into your own home.

And if you rent, your money is sure to make an investment – an investment of someone else’s that is!

If you are tired of paying someone else’s mortgage, it’s time to buy a home. And contrary to popular belief, you do not need stellar credit to be approved for a mortgage. Although it helps, it is far from necessary. However it never hurts to boost your credit score to be sure you qualify for the house you want.

If your credit score is too low, try these strategies to help you buy the house of your dreams:

  1. FHA mortgage – the Federal Housing Administration loans are not given directly to the buyers. Instead, they act as a liaison between the buyers and private lenders to provide this government loan.
  2. Because the government guarantees the loan, lenders are more likely to offer loans to under-qualified applicants, and also offer loans at reasonable interest rate.

    Buyers with low annual incomes, low credit quality, fresh graduates, or buyers who have gone bankrupt in the years before stand a chance to get these FHA loans.

    FHA mortgages require a down payment of only 3.5%.

  3. Seller financing – if a seller is financing a house, he should allow the buyer to pay directly instead of trying to finance a traditional bank. This can be an attractive option for some sellers who have to deal with over-saturated yields in real estate market.
  4. Seller financing is becoming more popular, because lenders are tightening their requirements and making non-conventional borrowers jump through insurmountable loops.

    More often than not, it is common for a seller to take 30% to 50% of the purchase price as down payment. If you have very good credit that might help in negotiating a lower down payment percentage, however.

    Be aware the seller will still charge you interest on the house.

    Always use the services of experienced property consultants because they know how to deal and handle complicated processes. An experienced real estate agent is in a position to guide through the necessary documents, the escrow account and the details of promissory note.

  5. Raise your credit score – while it is understandable that you want to buy a house, it may make sense to wait for betterment of your financial situation. Take a year off from buying things on credit and use that time to concentrate on improving your credit score.
  6. Boost your credit score by disputing errors on your credit report. Try to keep the investigation at a minimum; no investigation would be ideal. And of course pay all your bills on time, especially your credit cards, student loans and car payments.

  7. Your credit cards – in general, lenders see that you use less than 30% of your available credit.

Rather than turning in your older credit cards that you rarely use, keep them. They give you more credit and help show that you are someone actually worthy of credit.

If your credit score is 589 or 620, you can buy a house. You may not be able to get the keys to your new kingdom now. But if you are willing to choose a less conventional approach to the purchase of the house, or you choose to raise your credit score in the next 12 months, you can move to your new place. Just taking a few extra steps toward boosting your credit score just may be the ticket to that house of your own you’ve been wanting.

 

Boosting your Credit Score Helps

In all these cases and more it usually helps to boost your credit score before you attempt to buy a house. Try to get your credit cleaned up if it is not in the best shape, pay off as much of any credit card bills as you can afford, and in general try boosting your credit score as much as you can. All this is in an effort to help show you are worthy of the loan you will need in order to buy your house.

Copyright © 2011 HalfMoney.com

Charles is studying all about Gemstones and Ayurveda.

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