STEP 1: IMPROVE YOUR CREDIT SCORE
First, you must improve your credit score if you hope to get a mortgage loan to purchase your home. The higher your credit score rating, the better deals you’ll be able to grab. With a credit score of “below 660 or 680, you’re either going to have pay sizable fees or a higher down payment,” says Barry Zigas, director of housing policy for the Consumer Federation of America, as reported on Bankrate.com. A credit rating of 750 and higher will give you the best rates on the market, but 700 and up will still help you find a good deal. Access your credit report to see where you’re at. Settle any outstanding debts. Research what you can to improve your score. Don’t apply for any new credit for a full year before you decide to apply for a mortgage.
STEP 2: SAVE FOR A DOWN PAYMENT (AND CLOSING COSTS)
Once you’ve started working on improving your credit score, you need to start saving for a down payment, as well as closing costs, which some buyers forget about. According to Bankrate.com, you’ll need to save between 3 and 20% of the total purchase price for a down payment. Your credit history and loan terms determine how much you’ll need. Twenty percent is standard, but an FHA (Federal Housing Administration) loan can be as low as 3.5%, with a minimum credit score of 580. Further, Department of Veterans Affairs loans require zero down payment.
16
Powered by FlippingBook