Improve Your Credit Rating To Buy Your First Home

Your credit score has a big impact on your ability to get a home loan, and the interest rate you pay on your loan.

 

It may be difficult, however, for first-time buyers to secure a home loan, given that housing prices increase over time, while wages stagnate. Saving for a down payment is difficult, and the dollar amount of the down payment is a key factor in a lender’s home loan decision.

Many young people are in debt, given student loan debt, stagnate wages, and the cost of living in large cities where many young professional choose to live. You can, however, create a strategy to get that first home loan.

 

What’s a Credit Rating?

 

A credit rating is a score assigned to you, based on your income, debt payment history, and other factors. Banks pay close attention to your credit score, because the score has historically been an accurate way to assess a borrower’s ability (and willingness) to pay back a loan.

If you’ve had a financial setback, this article can help.

How Much Do You Save?

 

It can be hard to save, especially if you earn a lower than average wage, but it’s essential to increase your monthly savings amount. The larger your down payment is, higher chance getting a mortgage loan approved. So, it’s important to start saving what little cash you can. It may take a long time saving small amounts, but you can eventually save enough for your down payment.

 

Get Advice

 

Rather than trying to apply for a loan yourself, it’s best to go through a mortgage advisor. They know all of the tricks of the trade that can help you get the mortgage that you need. It’s worth working with an advisor who uses a service like Consumer Portfolio Services as these specialize in financing first-time buyers with poor credit. Once you have a mortgage advisor on your side, he or she will be able to guide you through the whole application process.

Use this site to apply for a loan Find My Rate at Social Finance Pay off credit cards or invest in a major purchase

Fix Errors

 

You can access your credit report online and review it, and your should go through it carefully to make sure the information is correct. Even spelling mistakes could cause your credit score to decline, because the creditor information may be misunderstood. Thankfully, errors are easy to fix, and you should do just that before you submit any new applications for a mortgages.

Many freelancers and business owners may have times when cash flow is a problem. Use this site to apply for a loan Find My Rate at Social Finance in order to cash flow your business until you can collect receivables from customers.

High Interest Rate?

 

You might find that some lenders are happy to lend to you, as long as you accept a higher interest rate. Of course, this means that your monthly repayments may be slightly higher than what you had expected. If, for example, you’re promoted and will earn a higher salary, you may be able to manage a higher payment. The same is true if you’re self-employed, and you increase your income by finding more clients.

The Payoff

It isn’t impossible for a first-time buyer with poor credit to buy a home. You just might need to jump through a few more hoops to get there!

 

 

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

Co-Founder: accountinged.com

(email) ken@stltest.net

(website and blog) https://www.accountingaccidentally.com/

(you tube channel) kenboydstl

 

Image: Bullseye, Jeff Turner CC by 2.0