Mortgage preparation and refinance tips and how
to manage your credit score to improve your creditworthiness!
Rates may be rising:
Buying a home is
probably the single largest investment most people make in a lifetime. By
preparing yourself and your credit before a home purchase or refinance, you can
ensure a smooth finance process and can potentially save thousands on your
loan. Improve your financial profile now so you can take advantage of the low
interest rates before they disappear. Start by checking your
credit:
- To get the best possible mortgage rate, make sure your credit profile is healthy and accurate.
- Aim to raise your credit score! above 650 in order to qualify
for most prime loans.
- If your is not quite 650, focus your efforts on paying bills on
time, reducing your debt balances, avoiding new inquiries and clearing negative
inaccuracies from your credit report.
- Make sure the information on your report is correct and fix any problems you discover.
- Give yourself 30-90 days for correcting inaccuracies.
- You can learn more about the dispute process online.
- Found an error while reviewing your credit history! with the
lender? Ask about the "rapid rescoring" process where you can submit a dispute
and potentially improve your credit in 72 hours.
Figure out how much you can afford
- The rule of thumb is that most borrowers can afford a home that
runs about two-and-one-half times their annual salary.
- Calculate your loan-to-value ratio to see how much you can
afford to borrow by dividing the loan amount by the property's value. If your
loan-to-value ratio is above 80 percent your rates may increase significantly.
Find a less expensive home or save up for a down payment to lower this
percentage.
- Calculate your debt-to-income ratio by adding up your monthly
debts and dividing by your monthly income. A debt-to-income ratio under 20-39
percent is usually considered good and will help you be perceived as
financially stable.
- Don't be afraid to start small. Just because you may qualify
for a large loan doesn't mean that it is a smart financial decision to buy as
large a home as possible. Take a careful look at your family budget and your
housing needs before you decide how much you can really afford.
Be a smart borrower this summer and save thousands by preparing your credit before you apply for a loan. plus your credit score in seconds.
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Rich's Enterprises, L.L.C., Prattville, Alabama