Fix Your Credit First! First Time Home Buying Tips
Find A Legitimate Credit Repair Company To Fix Your Credit
To most of us, the dream of home ownership is such a compelling one that your typical first time homebuyer tends to forget that buying a home should be treated as carefully as any other investment. Sure, it’s just about the only investment that you can live in, but it’s safe to say that as much as you might want to own your house, you’ll feel a bit better about parting with your down payment if you’re convinced that you’re making a savvy investment. It’s definitely a wise move to find a good real estate blog and soak up as much real estate knowledge as possible.
If you’re seriously considering buying a house, the very first thing you need to do (before trying to figure out how much house you can afford, or where and how to get the best mortgage) is to evaluate your credit. If your credit score is low, you will have trouble getting a mortgage. If you do get one, the interest rate will be high; you might even fall into the hands of a predatory lender, and that’s rarely a good thing.
While it’s not impossible to buy a home despite bad credit, you’re going to pay substantially more than a borrower whose credit is impeccable. Here’s how your FICO score impacts your mortgage rate. The following figures were taken from the MyFICO website, and are based on a $200,000 30-year fixed mortgage loan.
| FICO Score | APR | Monthly Payment | Total Interest Paid |
| 720-850 | 6.226% | $1,228 | $242,193 |
| 700-719 | 6.351% | $1,245 | $248,057 |
| 675-699 | 6.889% | $1,316 | $273,662 |
| 620-674 | 8.039% | $1,473 | $330,269 |
| 560-619 | 12.018% | $2,060 | $541,599 |
| 500-559 | 12.985% | $2,210 | $595,620 |
As you can see, having good credit (thus a high FICO score) goes a long way towards reducing your monthly payment. That’s exactly why it’s recommended to take care of your credit first. The lower your score is, the cheaper credit will be for you. And that has a direct impact on how much house you will be able to afford. If your credit score is 600, for example, you’re paying $2,060 a month on a $200,000 mortgage loan; had your score been 680, you would have been paying $1,974 for a $300,000 loan!
How much house you can afford and/or getting the best mortgage rely heavily on how good your credit is. Your fist order of business should be to check your credit score. Only then will you be able to accurately figure out your options and start scoping your local real estate websites (like Toronto Real Estate) for your ideal house. Otherwise you’ll have to do like this acquaintance of mine who had no choice but to look for an Atlanta bad credit home loan at very high interest rates.
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