Buying a home is a serious decision and the resulting financial responsibility is one in which you want to make sure you are comfortable with and can financially afford it. Not all home buyers have perfect credit, and you can still find a great home on a limited financial budget. Here are some tips to help you when you are buying a house with a lower credit score.
Review Your Credit
A lower credit score can mean your financing options can be tighter, so you want to make sure your credit is reporting correctly. Any errors on your credit report can contribute to its lower score and increase your costs to buy a house, so thoroughly check your credit and dispute any errors you find.
Look at your address and address history, and at any recent inquiries to make sure no one has tried to apply for credit in your name fraudulently. Also, look at all your open accounts reporting to verify they are all up to date.
Then, if you can pay down any of your credit cards and extra debt, do so before you buy a home. This step can help improve your credit score to boost your chances to get a more affordable loan rate.
Look at Your Financing Budget
After you have reviewed and cleaned up your credit wherever possible, you can use your credit score to apply for a mortgage. Get a good idea of the mortgage loan rates for a fixed loan or an adjustable loan, and how much payment would be for an average-cost home in your area. If you are already working with a mortgage broker, they can give you information about the current loan mortgage rates and the qualification criteria.
Take some time and plug in some different numbers with your mortgage interest rate options based on how much you want to borrow to buy a home. For example, look at the monthly payment on a mortgage at the fixed market rate, a rate a few points higher, and any difference in your payment range if you qualify for an adjustable-rate mortgage. If you find a home you want to buy but your credit prevents you from getting a low fixed rate, make sure you have a good idea of what the payment would be and a range of what you could afford. This can help you make a cutoff point where you need to shop for a lower-priced home.
Remember to Negotiate
Once you find a loan program and a home that you are ready to submit a purchase offer to buy, talk to your realtor about negotiating the purchase terms to help you in the initial purchase costs. For example, you can request your purchase offer for the seller to help you with closing costs, which can reduce your out-of-pocket expense at closing. Remember, this is a benefit to the seller as well because they will be selling their home, which is their ultimate goal. Remember these tips when looking at Pleasant Grove homes for sale.
