When am I ready or NOT ready to buy a home
My name is Wayne Sanford, I have been in the credit repair industry now for over 11 years. In that time I have diagnosed over 16, 000 credit reports for clients across the country. Credit repair is a service and like any service out there that you can do it yourself, for a small percentage of people there are issues that you just do not need the help of a credit repair company. Especially times where it’s only a little bit of advice that is needed.
However what I ALWAYS try to explain to people is the news media and government entities make it should like hiring a credit company is a waste of money think about it. IF it was as easy as they make it sound like EVERYONE would have 700 credit scores.
GOOD LUCK and enjoy the information in this blog and I hope it helps!
THIS WEEKS BLOG:
One of my many mottos’ is “I’m going to tell you the truth whether you like it or not.”
Over the years I am always surprised by getting credit reports to analyze of people wanting to buy a home “today”. And then a ten second review of their credit file tells me that perhaps many, many people really have no clue about some of the basics of home lending. Even the common sense type of things you would think someone would be aware of.
Many times it is typically “in hopes” of a lender tell them yes they are approved for a home loan. But let’s delve into just a little bit of what a lender wants to see and not see so if you are not a 700 credit score then reading this will save you time and headache.
We will first address some of the initial common sense things that should put a halt to any plans to buy a home to save you the aggravation of the documents and paperwork needed that has to be collected.
The first thing is if you are CURRENTLY late on any bills such as a car payment or credit cards. If you are stop right here!
A credit score tries to predict how you will pay your bills in the future (immediate and long term). So, how you pay your bills today count a lot more than how you paid them 5 years ago.
So think about it, if you were the lender how comfortable are you lending your money to someone who can’t pay their car payment on-time two months ago or is currently behind on a credit card bill with a $50 minimum payment?
The correlation of that to your credit score is equally devastating; one brand new late payment typically drops a credit score up to 70 points and possibly more depending on the individual credit report.
Credit is a math equation; it doesn’t take any job loss or sickness with any special consideration.
I have had people contact me asking for me to help them with their credit report so they can buy a home and they are behind literally all of their bills (reporting on their credit report) and also maxed out on all of their credit cards.
My first words to them (but said much more tactfully) is do you even have the money to pay me for my services if your behind all your bills. And if you do have the money to pay me then why are you not using that money to pay your bills?
I will tell you reading this and anyone I come across is if you remotely fit this profile then I will tell you like I have told others the following:
- Catch up on your bills so your no longer behind
- Continue to make a minimum of 6 months of on-time payments
- Then call me and we will re-pull your credit report to assess the status of your credit file.
Buying a home is a huge commitment as well as it reaps a lot of benefits (tax breaks for one). So that means it is something you need to plan for.
Unless you are buying a home out in the country land and are using a USDA loan or you are a veteran using a VA loan these are the only two loans that finance 100% of the loan.
But you will still need money to pay some fees that come up leading up to getting the home loan.
The days of getting a home for no money down or $500 have basically fallen by the way side. Those types of loans are what caused the mortgage meltdown back in 2008-2009.
The 2 main types of loans out there are FHA loans and conventional loans (we will not be discussing jumbo loans in this blog today).
FHA loans require 3.5% of the house price down so for example if you’re buying a home for 100,000 you have to bring a check to the table for $3,500.00
A Conventional loan requires a 5% down payment so for the same loan the amount you pay is $5,000.00
HOWEVER, the obvious isn’t always the best so when you are ready to qualify then sit down with a loan officer and go over the interest rates for both and all the “fees” and then do a comparison to see which loan is best for you. Don’t take the loan officers worked for it ( SORRY loan officers reading this, not everyone is as ethical as you so people have to be careful!).
Want to learn more about how the world of credit works? Contact me today and get my book in full blown color. No nonsense direct answers and easy to understand.
how the “Real world of credit” works. wayne@waynethecreditguy.com
And of course if you need some credit work to increase your credit score then call me today to discuss!
