Tips To Buying A Home Along The Shore If You Have Bad Credit

    When it comes to buying a home on along the Shore your credit score has a big impact and is crucial in determining if you qualify for a mortgage.  The higher your score is the less of a risk you are in the eyes of the mortgage lender.  If your credit score is below average that doesn’t necessarily mean you’re not able to secure a mortgage loan. Yes, you can still buy a home with bad credit, however, it might not be as smooth of a home-buying process.

    What is a credit score?

    When applying for a mortgage loan you can expect potential mortgage lenders to check your credit score, a number that is calculated from information that is taken from your credit report.  There are five areas that make up your score and each has a varying degree of importance. In order of importance they are, payment history, debt-to-credit utilization, length of your credit history, mix of credit, and new credit.

    Lenders want to see that you are making payments on time. Missing even one payment can drastically lower your score. Your debt-to-credit ratio is how much debt you have racked up on your credit cards divided by the credit limit on each card.  The overall length of your credit history will help increase your overall credit score as well as your credit mix. Taking out any new line of credit or trying to will lower your credit score.

    What credit score do I need?

    The highest credit score a person can have is 850, but only 0.5% of consumers will ever achieve that according to a report by the Fair Issac Corporation.  However, once your score is over 740, you are considered to be in the ideal score range to receive a mortgage loan with the best interest rates.  If your credit score is anywhere in the 700s you should be eligible for an attractive mortgage interest rate.  Most conventional loan lenders are looking for at least a minimum score of 620.

    How to boost your credit score

    If your credit score is not where you want it to be, it’s time to examine what caused it to be that way. Many times lower credit scores are a result of a high debt-to-credit ratio. The best way to fix this is to reduce your debt. Keep credit card charges at less than one-third of your total credit limit.  Requesting an increase in your credit line may also increase your credit score as it would lower your debt-to-credit ratio. Request your free credit report annually and review it for any inaccuracies.  If you notice any errors on your credit report notify all three credit reporting agencies to have it removed (Equifax, TransUnion, and Experian).

    Work with a mortgage lender

    Don’t assume you won’t qualify for a mortgage loan without first talking with a mortgage lender.  Home ownership may be closer than you think.  If you don’t qualify for a mortgage loan now there are steps you can take today to start repairing your credit to get you closer to homeownership.

    The Ferzoco Group are experts in real estate from Ocean City to Cape May. Real estate is one of the biggest investments of your life and The Ferzoco Group knows what it takes for you to take that leap of faith in real estate. We provide you with the tools, professional service, and resources it will take for you to live the dream.  Contact us here, or give us a call directly at (609) 399-5454. We are here to help you with all your real estate needs.


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