Housing markets show continued signs of strengthening according to reports released on Wednesday. The National Association of RealtorsÂ® reported that sales of pre-owned homes rose to 5.49 million in June as compared to Mayâs revised reading of 5.32 million pre-owned homes sold and expected sales estimated at 5.42 million sales. Expectations were based on Mayâs original reading of 5.35 million sales. Juneâs reading was the highest since February of 2007. Readings for existing home sales are calculated on a seasonally adjusted annual basis.
Imagine that you’ve found the perfect home and are ready to apply for financing. Your home loan approval amount comes back lower than you would have expected and at an interest rate significantly above what you have heard is available on the market.
This could be because you have an average to poor credit score.
Mortgage lenders base interest rates on many things, but your credit score plays a large part. Anything between 720 and 850 will typically qualify for better interest rates. A mediocre score is usually between 660 and 719, and a low score is 659 and under.
If you have a lower score than you’d like, below are a few traits for you to follow of people who possess higher credit scores and secure the best home financing.
They don’t max out their cards.
It’s better to keep a low revolving balance on a few cards than to spend every dime allotted on one. The ratio of credit card balance to your credit limit is called credit utilization. The higher your credit utilization, the larger affect it can have one your credit score.
They make payments on time.
This is very likely the most important tip for your credit health. If you miss a payment on a term loan, credit card account or monthly home bill, then you could be turned over to collections, which will affect your score negatively. You will almost surely be reported as late to the credit bureaus, which will in turn drop your credit score precipitously. Absolutely make all of your payments before their due date.
They stay with one card.
Don’t close and open credit card accounts frequently. Each time you make a change to your line of credit, it affects your score. Even if you don’t want to be tempted to use a credit card, keep the account open and leave the card at home. According to the Fair Isaac Corporation (FICO), high credit achievers have accounts that are usually at least 11 years old.
Excellent credit could qualify you for a better interest rate, which might save you thousands of dollars over the life of the loan. So stay on top of your monthly credit bills and keep a low balance on just a few cards to watch your score steadily increase.
If you’re ready to learn more about your ability to purchase a home, call us at 425-401-8787 or visit our website at www.sammamishmortgage.com.