Our real estate agents are always glad to support your search for the best Dallas homes for sale. First-time buyers, in particular, find the process easier when they connect with the right real estate agent—someone with plenty of experience in their situation. Many of the big questions first-time buyers have usually deal with obtaining a mortgage loan.
They often worry about the effect of credit score on their hopes for a favorable mortgage. Most people don't have perfect credit, so they wonder if their credit will stop them from getting the home they want. Luckily, the answer to this is almost always "no." A few credit blemishes here or there will not usually disqualify you from getting a home loan. Even if you've had credit problems in the past, many lenders are willing to look at your current income and credit behavior to determine how much you can borrow.
That said, your credit score is still relevant. A good credit score can improve your loan terms. Raising your score just a few points can make a worthwhile difference, so don't feel you need perfection. Even if you have only a few months before you begin your home search, there are steps you can take to raise your credit score. This may translate to better loan rates and substantial savings over time. Let's look at some ways you can raise your credit score faster.
- Pay Off Any Credit Debts You Can
As a general rule, paying credit card debts with a higher APR (annual percentage rate) will help you reduce your total debt load while paying less in interest. Look at the APR of each of your credit debts and pay off any that combine a low balance with a high APR.
- Don't Close Any Unused Credit Accounts
Closing an unused credit account may seem like a good idea, but it's actually self-sabotaging. This is because the total amount of credit you have influences your score. Simply pay off each credit card and leave it. You can use cards occasionally for small purchases to keep them active.
- Don't Take on New Loan Obligations
When planning to buy a home, it's best to make it your sole financial focus if you can. Lenders will tend to be suspicious of buyers who take on a new car loan or other major debt before a home search. In the early stages of getting a loan, this may endanger your plans.
- Choose a First-Time Buyer Loan Program
This won't affect your credit score directly, but it may help you boost it in the long run. First-time homebuyers can benefit from many state and federal programs that make it easier to access a mortgage loan. Most of them put less emphasis on credit score or may not consider it at all.
- Examine Your Credit Report for Errors
Credit data is collected from a number of sources and compiled by several different companies. When mistakes are made, they can negatively impact your credit score. Use the official site to get your free annual credit report and follow up with creditors on any errors you catch.
- Consider a Side Gig
If you can raise your income even a hundred dollars a month, you'll be able to pay off your debts that much faster. There are many legitimate opportunities to make more money out there on the web, but be careful you don't end up working around the clock!
Contact us to find out more about your options as a first-time home buyer here in the Dallas area. The team at RE/MAX DFW Associates looks forward to helping you.