Credit Help: Buying Real Estate -- Not the Same as Buying Cars

Credit for Buying Real Number Estate is Different than Credit for Buying Cars

Forget what you've been told about credit.

You may be shocked at some of these tips because this information runs contrary to what other so called experts state you. Qualifying for a existent estate purchase necessitates different credit than automobile funding or retail credit.

Common Credit Myths

1. You need to pay off your credit cards
2. You need to fold credit accounts
3. You need perfect or good credit to purchase a house

Credit Facts

1. Paying off your credit cards lowers your credit score
2. Shutting credit accounts lowers your credit score
3. You don't need perfect credit to purchase existent estate

Why not pay off credit cards? Because paid off credit cards make not calculate in your credit score. Real Number estate lenders like to see open, active accounts with low balances.

Why not fold accounts? Shutting accounts before the final payment often costs consumers more money because credit card companies raise interest on closed accounts.

You can purchase existent estate with poor credit, but you will salvage thousands in loan costs if you keep good credit. A bad credit report go forths homebuyers with sub-prime loans which have got higher point charges, prepayment penalties, and higher interest charges, which therefore cost more than money. For instance, a mortgage loan of $150,000, 30-year, fixed-rate mortgage, interest rate of about 5.72 percent costs around $870 a month; poor credit scores raise the interest rate over 9 percent and the payments over $1,200.

As you see from these payment differences, good credit intends that you can finance a more than expensive house with the same income, or salvage $330 each month.

Credit Requirements for Mortgages

Credit needed to purchase existent estate is not the same as good credit. Besides your credit score, mortgage lenders see your debt-to-income ratio and other credit matters, unlike other credit grantors. Your debt-to-income ratio is the comparison of mortgage payment, including taxes, interest, and insurance to your sum gross monthly income. Real Number estate lenders also see your employment makings and your overall debt ratios.

Understanding the difference between good credit and the credit needed to obtain existent estate funding assists you purchase houses!

(c) Copyright 2004, Jeanette J. Fisher. All rights reserved.