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A Credit Score Checklist: Home Buying Tips For First Time Buyers


If you’ve been considering buying a home, there are a few things to put in order before you start looking through real estate listings. It’s good to know your key credit-focused home buying tips for first time buyers.

While there are many factors that go into purchasing a home, one of the most important is your credit score, which influences everything from your mortgage rates to your home owner’s insurance.

Because of this, it’s critical to understand how your credit score affects the home buying process and what you need to do to prepare well before you start shopping around.

Home Buying Tips For First Time Buyers: 3 Credit Score Must-Dos Before You Buy

Before you can attain your dream of owning a home, you’ll need to be sure that your credit score is in great shape for this big step. Follow these three tips to get started:

1. Check your credit report

To get an idea of how much you can afford and what (if anything) you’ll need to do to improve your score, you’ll need to check your credit report. There are dozens of sites where you can check your credit report, and many credit card issuers are now offering real-time FICO scores for free on their monthly statements. Once you’ve got your credit score, you’ll want to comb through it for any damaging or delinquent accounts and resolve them where you can. While you don’t have to have a perfect credit score to buy a home, a minimum score of 620 is about the lowest you should reasonably go, so take the time to improve your score before you begin shopping for homes if needed.

2. Understand what you can truly afford

To understand what your home buying budget will be, you’ll need to add up your total monthly liabilities (expenses paid) and compare it to your monthly income. When approving people for mortgages, lenders evaluate the debt-to-income ratio, which is calculated by adding your total liabilities to a prospective monthly house payment, and then dividing that number by your gross monthly income. Most lenders are comfortable with a debt-to-income ratio of up to about 45%, so you should consider this when shopping for homes and prepping for buying a home.

3. Compile documentation of your assets

To make yourself as attractive as possible to would-be lenders, you’ll need to have all the paperwork to demonstrate your rental history and assets. Most mortgage lenders will want to see verification of at least one year’s worth of housing expenses and seasoned (at least two months old) liquid assets alongside your credit scores and reports. While it may seem cumbersome, taking the time to compile this package in advance will give you a better chance at your dream home.

The Case for a Good Credit Score

A great credit score and all of the paperwork needed to back it up is one of your most valuable weapons when it comes to the home buying process. By having these things in order and knowing your key home buying tips for first time buyers, before you head to the mortgage lender’s office, you can give yourself a better shot at your dream home.

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