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3 Credit Prep Tips Before Buying A Home

New year, new hopes, new dreams, and possibly a new home for you in the coming months.

What can you do to better plan, better prepare, and better educate yourself about stepping into that goal?

Let us give you 3 Credit Preparation Tips and One Action Step that will open up new phases of your map of buying a house in the coming months.

3 Credit Preparation Tips

1. Know your Credit Score.

When you get a loan, the condition of your credit will affect the rates and terms of your loan.

Use one of the credit services to find out your score and verify what is being reported.

We have had two customers who took this step, only to find out their identity had been stolen. This postponed their buying plans until they could get it cleaned up.

Another customer discovered he had no credit score. He had paid off all his debt and closed all his credit cards. He had to open new cards, use them for a few months while paying them off every month, and then he could buy their home.

Know Your Credit Score
selective focus of glasses near document with credit report letters

2. Know your Debt to Income Ratio.

Every payment you have to make each month is a portion of your income.

If you make 10,000 a month and have to pay at least 6,000 a month in debt service (car loan, house payment, student loan payments, minimum credit cards, child support), your ratio would be 60%.

Your goal is 36% or less.

Be as aggressive as you can to lower your debt-to-income ratio.

Debt to Income Ratio Lever

3. Know your Credit Utilization Ratio.

Every credit card you have will have a maximum limit.

When you total all your limits up (if you have more than one card), and compare it to the total balance on all your cards, that will give you a ratio.

Let’s say you have 4 credit cards with a total limit of $40,000. You carry 30k in credit card debt. That gives you a utilization ratio of 75%.

Be as aggressive as you can to lower your utilization ratio to 10% or less.

Know your credit utilization Rate

Your Next Action

By paying down existing debt, you can improve both ratios and have the potential to get better terms on your loan.

You’ll also have a significant impact on your credit score.

We promised you an action step that would open up new phases to your goal.

We’d like to give you our question checklist.

You might ask why? This question checklist will open up new avenues of discovery as you take steps to better educate yourself for your homebuying journey.

You might have a blinds pot or two you don’t know about that this list of questions will show you.

Get the list

When buying a home, there many questions you may want to ask yourself as part of your preparation.

We’ll give you questions for us as your realtor, questions for your lender, questions about the property, and questions about the process.

What if…? When…? How…? You’ll have plenty of questions as you buy a home. Whether it’s your first home or you’re an experienced buyer, each situation is unique. Asking questions is important! Don’t forget any of the important ones.

Download your free 8-page question list to help you know some next steps of information gathering as you prepare to buy a home

To get instant access to an 8-page list full of questions to start thinking about

Follow this link.

You’ll need to provide your best information and mobile phone to get it…..