Financial experts are saying now is the time to buy a home…. Lock in a low rate now and live low cost after buying at low prices. Which experts? Warren Buffet and the investor who predicted the boom and bust of the housing market, according to real estate blog KCM. See http://www.kcmblog.com/2012/01/09/when-the-prophet-says-buy-%E2%80%93-buy/ and http://www.kcmblog.com/2012/01/30/what-does-warren-buffet-think-about-buying-a-home/
If you are in the position to buy real estate in Wisconsin, it is indeed a good time. To qualify for the best mortgage rates, you’ll need a good credit score as lenders use your score to determine how credit worthy you are – how likely you are to make payments on time. Your lender will run a detailed credit report on you before agreeing to provide you with a loan, so it is good to have an idea what goes into a credit score.
How is a credit score calculated?
While your income is an important factor in obtaining a mortgage loan, your credit score has nothing to do with your income. The following is an approximate breakdown of how a credit score is determined:
35% is based on your past payment history
30% on amounts you owe on credit cards and other lenders
15% is based on the length of your credit history or how long you have had credit
10% is based on new credit – the number of new accounts or recently opened accounts
10% is based on types of credit – a good payment history on different types of credit is a good thing.
A higher credit score means lower interest rates which saves you money over the course of your loan – a nice reward for being a responsible borrower.
Some simple tips to improve your credit score:
- Pay bills on time
- Keep low balances
- Be conservative when applying for credit. How many cards do you really need?
For more on credit reports, see this Home Loan Process page on Inlanta Mortgage’s site or http://www.indexcreditcards.com/whats-a-good-credit-score.html Index credit card article suggested by Carol Becker Samsa of our Metro South office
And one more thing about credit… If you are in the process of buying a home, don’t make any drastic or expensive purchases that could alter your score and possibly delay your closing. Your finances are evaluated early in the buying process and later on in the process to be sure nothing has changed.
Thank you for reading the First Weber Wisconsin real estate & Wisconsin living blog for information on what makes up a credit score. To begin searching for a home in Wisconsin, please search firstweber.com or to search for a Wisconsin mortgage lender, please see First Weber’s mortgage services section.