The very first thing that a bank would scrutinize in judging a suitable mortgage rate for your home is your credit score. Here are 6 important notes to consider in maintaining a high credit score the moment you decide to loan a home.
1.) Avoid applying for a new credit card. This is definitely a threat for foreclosure, since you are exposed to more payable. It is also imperative for every bank to issue a hard credit report each time you apply for a credit line. Credit score will be momentarily decreased.
2.) Never close out your old credit cards, although its balance has reached $0 already. When your credit report is reviewed by the bank, initially they will check on your ratio of debt to the available credit. Lower ratio is preferable. This is an example of how closing an account would affect the ratio. For this case, you have a $6,000 payable in one of your credit card which has a $10,000 limit. Also, you still have 5 other credit cards with $10,000 limits; as a result you now have an available credit of 6 x $60,000 or $60,000. Before closing the 5 cards with $0 balance, your ratio is $6,000 / $60,000 or 10%. If all these 5 accounts will be closed out, there would be an increase ratio of $6,000 / $10,000 or 60%. As a result, you would have a notion of higher risk for not able to pay a home loan.
3.) Do not merge all your debts. If you do so, your ratio of debt to your available credit will increase, which is unfavorable.
4.) Maintain a present job and home address. The lengthier you stayed in your regular job and current home address, the most preferable. For the reason that those who stayed permanently in certain address and have a regular job at present are more dependable and established.
5.) Ensure every existing financial account that you have are all in good standing. This comprises current mortgage, credit card account, car loans, and student loans if any. Even one late payment could automatically lower your credit score to as high as 80 points. If that decreases you credit score from that of 760 to 680, as a result your mortgage rates will rise up to as much as 0.4%.
Considerably, you should also rate high in your credit report. Regularly check it to guarantee that all of your accounts are up to date and no red flags in it. If there is probable nonconstructive record on your debt report during its 30-day appearance, you may easily resolve it. After 60 or 90 days, it would be much difficult on your part.
Jeff Deutsch is a financial analyst and contributes to this website. To read about New Jersey jumbo mortgage and jumbo mortgage rates NJ please click the preceding links.
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