Top 12 ways to fix your credit history so that you can apply for a mortgage

getting a mortgage

fixing your credit to qualify for a new mortgage

We would all like to own our home, but the process is not always so easy. Most lenders now require a large deposit, and on top of that, they would love you to have a perfect credit score. Not many of us have that perfect credit score, however, it is important to be familiar with the top 12 ways to repair your credit so that you can qualify for a home mortgage.


Step 1

Get real – find out what out your actual credit score. There are quite a few agencies, and bureaus, that can help you with that, and it might be a good idea to ask a potential lender who they work with. This ensures that you are looking at the same information that you are, the most popular credit bureau is Experian, and one of the most popular services is Credit Karma.


Step 2

How well do you know your finances? Most people don’t know their finances, and you may have a few surprises in store. Set up a spreadsheet and record EVERYTHING that you spend. Now, you can see where you are spending the most money.


Step 3

Start saving some money. Once you have identified where you can save money, start by actually saving that money. Put it aside every month, and start a savings account. This can really impress a lender; it shows that you are taking an interest in your finances.


Step 3

Are you paying your bills on time? If you are not, make sure that you start doing so, and keep the practice up. It will quickly improve your credit score.


Step 4

Don’t close unused accounts. Once you have paid off a credit card, it can be tempting to close the account down. But, even unused accounts are useful, they will show a zero balance and will impress a future lender. You might even periodically make a minor charge on that inactive account


Step 5

Don’t apply for too many credit cards or accounts. It often has a negative effect, and all of those searches will show up on your credit report. Also, don’t consolidate debt, credit agencies don’t like that. Deal with one debt, pay it off and move on.


Step 6

Have you been divorced? Tell the credit company as sometimes credit which your former spouse may have applied will show up.


Step 7

Are you having a credit problem? Don’t ignore your lender, speak to them and communicate with them in writing. Once you have started to make regular payments, make sure you keep them up.


Step 8

Student loans may be following you around for a long time. It is a big problem, but can you do something to help yourself? Negotiate with your lender and ask if you can pay a bit extra towards your student debt every month. The advantage is that many lenders are happy to reduce their interest rate a little bit. Even a small reduction will help you to pay off that loan quicker and cheaper.


Step 9

Do you need a new car? Are you absolutely sure? You may be able to buy a second-hand car for cash, instead of using finance. After all, it is not about having a new car; it is about buying a home.


Step 10

It may seem odd, but a lot of people do not question the amount of tax they pay. Saving money on tax will allow you to save more money towards your home. Keep any paperwork the process generates, it will prove that you are financially savvy.


Step 11

Keep your personal information to yourself. So many credit thieves these days are profiting from borrowing your credit history or your personal details. If you don’t safeguard your info, you may have a nasty surprise when you go to try to get a home mortgage; it is all too easy for some to use your personal information and take out loans in your name. This is more common than you might think, and the process of getting the details removed from your file can be complicated. Check your credit history on a regular basis.


Step 12

Pay off an existing home mortgage to show your ability to complete your obligations. Think about it, even though your credit score is based on how well you can manage your ongoing obligations each month, creditors still want to see that you can pay some things off from time to time too. Also, since your credit score is based upon how much outstanding credit you are using compared to your income, you can quickly raise your score if you lower your overall debt load. So, if you are thinking, “but I don’t have enough money to pay off my home,” you could consider selling your house and then just renting for a while. And if you are wondering “how am I going to sell my home in today’s market?” You should check out a high rated company that buys houses which is listed with the BBB.


Above all, appreciate that credit agencies and credit bureaus, should be used to your advantage. Figuring out how you can make yourself look good to a potential lender is all about taking charge of your finances. The top 12 ways to repair your credit so that you can qualify for a home mortgage is all about getting financially savvy.



Seller Financing Your Home

Seller Financing Your Home

Buyers and sellers in the housing market nowadays are looking for creative and more profitable ways of buying and selling houses. The seller carryback financing method is one that many buyers and sellers prefer compared to using the more costly banks and credit unions methods.  Some people consider a house sale like competing in a triathlon, but the winners of the race are usually those who get creative.

This article is going to discuss ten main advantages which have made this means of purchase to be popular. Selling a house using owner financing is less costly, creates a shorter marketing period, produces a quicker closing time, and more clearly identifies the true market value of the house.

As we are going to see from the discussion of these advantages in detail, both the sellers and buyers mutually benefit from this method.

  1. The marketing period is shorter – The selling of houses is typically faster with seller financing than going the traditional route. According to a recent in-depth study, it was observed that this method created a sale about twenty percent faster than other houses that were sold requiring the more traditional forms of financing like conventional mortgages from credit unions or banks.
  2. The speed of closing is faster – Seller carryback financing typically speeds up the closing period because there is no underwriting or mortgage needed from a conventional lender and the transaction of the house can close in a very short time.
  3. There are many buyers – Since less than ½ of potential home buyers can actually qualify for a new loan from a bank, the offering of seller financing will attract more buyers to come and purchase houses.
  4. The real market value of the house is recognized – This is because there is a maximization of prices of house and the seller will be able to recognize the actual market value of the house. According to many markets, this is referred to as sales concession.
  5. There are very few restrictions – This is because the seller gets to pick and choose what is important to them. Since the seller makes his own rules, there is no bureaucracy or red tape involved like you would normally see from a large financial institution. These sellers usually attract more buyers on account of the seller’s flexibility when it comes to issues like credit history and others like ratios of debts and incomes.
  6. The cost of financing house using this method is lower – This is mainly because of the presence of many lenders which will lend a small amount of money to borrowers hence eliminating the worry associated with expensive loan costs. This gives more advantage to both the buyer and the seller of the house for they spend less and can divert the remaining money on other things like school fees for their children or for such things as insurance.
  7. The sellers get to earn interest on the loan – Since the sellers are the creator of the loans, they get to receive valuable interest on those loans. And if the sellers are willing to be patient, they can remove any balloons from the seller carry back and increase the length of the loan and thus the amount of long-term interest that they will ultimately collect.
  8. The house is secure – If the borrower ever reaches a time in which he/she is not able to pay the remaining amount of money, the seller as the lender can foreclose and repossess the house. This is because the house itself is used as collateral to back up the loan.
  9. There is the deferral of income tax – When the house is sold and yields profit and is going to be taxed, the seller has a chance to delay amount due when reporting under this method of installment sale according to IRS Publication 537, form 6252. In essence, this allows the seller to defer the amount of tax he owes almost indefinitely so long as he continues to roll his sales over into new properties.
  10. The seller gains a liquid asset – Since the seller is given a promissory note signed by the buyer, the seller can resell that note on the open market to a note buyer. These notes are very valuable, and if a seller ever wants to cash out, there are many note buyers out there that would love to purchase the note from the seller at a discount in exchange for the rights to receive all of that cash flow from the mortgagee.

In conclusion, the sellers are looking for the selling method which is not costly and will enable them to earn the highest amount of profit. Also, it is clearly seen that the sellers and buyers are protected when this method is used for buyers can pay the house in installments and also due to the lower costs, they are both able to save money.