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Here's How
Your Credit Score Will Affect How Much House You'll
Be Able To Buy...
There is a new "buzzword"
in the mortgage industry.
Actually, it’s two buzzwords:
Credit Scoring.
In their never ending search to find
an easier way to rate a person’s financial ability,
mortgage companies are using a new system called credit
scoring (Also called "FICO" scores –
I won’t even tell you what that means).
When lenders pull up your credit
report, they can look at
all of the debts that you have, how much you owe, how
well you make your payments, and many other things like
if you’ve had any bankruptcies within the last
several years.
With your credit report, lenders
now get a "credit score" which takes all of
this information and creates a "credit score"
for you. This credit score is a number that lenders
use to decide which types of loans that you will be
able to get and be eligible for.
As with all new things, there is
controversy over these credit scores.
Some types of loans require that
you have a certain credit score to get the loan –
no exceptions. And credit scores change over time. As
a matter of fact, just applying for credit can lower
your credit score.
Now that you know what a credit score
is, here’s how to make sure you have the best one
possible…
First of all, don’t apply for
any new credit cards or consumer loans.
Don’t go down to the furniture
store and take them up on the "No interest, no
payments, no nothin’ for one year" financing
program -- and of all things, don’t go out and
finance a car!
You can do all of these things after
you buy your house and get your mortgage, but for your
own sake, don’t do it before. Buying things on
credit not only hurts your credit score, but it also
leaves less money for you to use as a house payment.
And lenders look at this figure also
to determine how much money they will lend you, and
how much they will charge you to lend it.
So wait until after you’ve bought
your home and moved in to get that new couch or big
screen TV-- And there is another reason to wait.
After you buy your home, you can
get a loan for up to 125% of your home’s value
to buy whatever you want.
And when you get a loan against your
home, all of the interest you pay is tax-deductible!
Michelle Justice, Realtor
Keller Williams Realty
1005 E. Grand River
Brighton, MI 48116
(810) 227-5500
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