When you’re buying a home, whether it’s a beachfront condo in Port Aransas, a newly built home near the beach, or a $300,000 home on North Padre Island, you’ll want your credit score to be as high as possible—and that’s because you’ll be eligible for more competitive interest rates.
Even if you have bad credit, buying a home isn’t out of reach. However, there are a few steps you can take to boost your credit score in a relatively short period of time.

How to Improve Your Credit to Buy a Home

Improving your credit doesn’t happen overnight, and it doesn’t happen in a vacuum. You have to handle a few things to get yourself on the right path, including:

• Getting a major credit card. Many credit cards offer “secured” financing, which means if you give the card company a certain amount of money, they’ll give you a credit card with an equal limit; eventually, you’ll get your money back (and if you don’t pay your bills, they’ll keep your original deposit).
• Show steady employment by keeping the same job for at least a year.
• Hang on to your check stubs.
• Save up 10 percent—or more—of a home’s purchase price to use as a down payment.
• Never pay a bill late. Ever.

Are You Buying a Home in Port Aransas?

If you’re looking for a home in the beautiful city of Port Aransas, we’d love to help you.
Call us at 361-563-7788 or get in touch with us online to tell us what you want from your next home. We’ll begin searching right away.
While you’re here, check out our:

• All-in-one mortgage calculator
• Free homebuyer handbook
• Free eBooks about buying a home (and more!)

You can also check out:

• Port Aransas homes for sale
• Port Aransas condos for sale
• Port Aransas lots for sale
• North Padre Island homes for sale
• North Padre Island condos for sale
• North Padre Island lots for sale

Filed under: Blog, Buying by Julie Woodward
No Comments »

Your FICO scores affect your interest rate when you’re buying a home (and contrary to popular belief, you can buy a home after a foreclosure or bankruptcy if you work to improve your credit).

What Are FICO Scores?

Your FICO score is a type of credit score created by the Fair Isaac Corporation. Lenders use your FICO score to find out whether you’re a big risk (and whether they’re willing to take that risk on you).

What’s a Good Credit Score?

Credit is scored on a big scale ranging from 300 to 850. The higher the number, the better your credit.
According to The Balance, here’s the breakdown on what interest rates you may qualify for based on your FICO credit score, assuming that you have a 10 percent down payment and meet all the lender’s other requirements:

• FICO Score of 600 to 640: + 1.625 percent over prevailing rate. This means if a borrower with good credit is paying 5.875 percent, your interest rate would be 7.5 percent.
  A $200,000 amortized loan at 7.5 percent would give you a monthly payment of $1,398.
• FICO Score of 560 to 580: +2.875 percent over prevailing rate. This means if a borrower with good credit is paying 5.875 percent, your interest rate would be 8.75 percent.
  A $200,000 amortized loan at 8.75 percent would give you a monthly payment of $1,573.
• FICO Score of 540 to 559: +3.425 percent over prevailing rate. This means if a borrower with good credit is paying 5.875 percent, your interest rate would be 9.3 percent.
  A $200,000 amortized loan at 9.3 percent would give you a monthly payment of $1,653.
• FICO Score Under 540 to 500: +3.875 percent over prevailing rate. This means if a borrower with good credit is paying 5.875 percent, your interest rate would be 9.75 percent.
  A $200,000 amortized loan at 9.75 percent would give you a monthly payment of $1,718.
• FICO Score Under 500: +6.25 percent over prevailing rate. This means if a borrower with good credit is paying 5.875 percent, your interest rate would be 12 percent. With a FICO of less than 500, you will not qualify for a 90 percent loan, but you may qualify for a 65 percent loan, therefore, you need to increase your down payment from 10 percent to 35 percent.
  A $200,000 amortized loan at 12 percent would give you a monthly payment of $2,057.

Are You Buying a Home in Port Aransas?

If you’re looking for a home in the beautiful city of Port Aransas, we’d love to help you.
Call us at 361-563-7788 or get in touch with us online to tell us what you want from your next home. We’ll begin searching right away.
While you’re here, check out our:

• All-in-one mortgage calculator
• Free homebuyer handbook
• Free eBooks about buying a home (and more!)

You can also check out:

• Port Aransas homes for sale
• Port Aransas condos for sale
• Port Aransas lots for sale
• North Padre Island homes for sale
• North Padre Island condos for sale
• North Padre Island lots for sale

Filed under: Blog, Buying, Credit Scoring by Julie Woodward
No Comments »

For home buyers in Port Aransas and nationwide, credit scores can change low mortgage rates and alter home loan approvals.

Borrowers with high credit scores get access to lower mortgage rates, for example, and can find the mortgage approval process to be more smooth that borrowers with low credit scores.

If your credit score is low, here are some basic ways to help improve it. 

Get The Reports
Download an updated version of your credit report from each of the three major reporting bureaus — Equifax, Experian and TransUnion. The reports may mirror each other, but credit accounts — especially derogatory ones — sometimes don’t appear on all three. Ordering reports from all three bureaus is a safety step. Note that the credit bureaus each use different scoring models so your credit scores will vary.

Check For Errors
Yes, credit reports can have errors in them. Should you find any items on any of the three credit reports which, in your opinion, do not belong or are erroneous, contact the credit bureau regarding removal. Errors on a credit report must be addressed with each bureau individually. 

Pay Up 
Or, rather, pay down. Be diligent about paying down your credit card balances in order to lower the percentage of your credit line(s) in use. In general, aim for a 30% ratio or less. An added benefit of paying down debt is that it can lower your total monthly debt load, which can increase your maximum home purchase price.

For items which are harming your score, such as a 30-day or 60-day mortgage late payments, medical collection items, and/or judgments, consider writing a brief letter which explains the circumstance of the derogatory credit event. Such a letter won’t help your score to improve, but it can help your lender to make better credit decisions, which can aid in “exceptions”, if required.

Making even minor changes to an overall credit profile can yield measurable long-term results. It can also result in lower mortgage rates.

Filed under: Credit Scoring by Julie Woodward
No Comments »