Wondering how to get a better mortgage rate? Start here to learn how to get one!
Your credit score is critical if you intend to purchase your new custom Florida home via a mortgage. That’s the route most folks choose, and boosting your credit score also boosts your options for a solid mortgage rate.
Many of us carry some debt via credit cards or in loans, and how well (or not!) we manage debt is the most important factor in our credit score.
Per the online financial site Nerdwallet, a credit score of 620 is considered the current minimum by most mortgage lenders. Each lender has different parameters for different loans, but focusing on improving your score can mean a better mortgage rate.
The three major credit reporting bureaus (Experian, Equifax and TransUnion) determine your score by how well you manage existing debt.
Here are tips on how you can improve your credit score to get a better mortgage rate, but first save this link to the finance section of our blog.
Reduce debt for a better mortgage rate
If this has been a bugaboo, resolve to curtail discretionary spending — frequent takeout, shopping, entertainment — and use the extra dollars to knock out debt. The more cash you throw at debt, the faster it disappears and your credit scores improves.
Start by paying all bills and debt payments on time. Once you’re consistently amassing extra cash, pay more than those minimum monthly payments.
A friendly reminder: refrain from adding to those debt totals as much as possible.
Bulk up savings
Savings accounts don’t directly impact your credit score, but they can protect your budget from unexpected expenses that could turn into big bills, credit card charges or additional loans.
Instead of applying plastic when that 15-year-old washer and dryer set conks out, access your savings to pay for replacements, and avoid future, additional payments (and credit-score ding).
That savings account also can function as the holding tank for your down payment on a new custom Florida home. The more you feed your savings, the deeper your financial reservoir.
Use a monthly budget
Not always easy.
But curtailing and tracking expenditures, plus postponing discretionary purchases such as a new motorcycle can make it doable and enjoyable — especially when that extra cash KOs debt faster.
Increase income
If it’s possible, it can make a major, indirect impact on your credit score.
Like savings accounts, increasing your income doesn’t atomically affect your credit score. But it does give you more financial resources to take the actions that DO affect your credit score, such as reducing existing debt faster, consistently paying all bills and other financial obligations on time, over the long haul, and — bonus — build savings for a down payment on your future home.
Increasing income doesn’t have to be a time-consuming job hunt. Check out seasonal or part-time openings near you. Have a garage sale, or sell unwanted household items and collections online or via consignment shops.
You’ll have less clutter and possessions to move when you do achieve that new-home dream.
Ready for your new custom Florida home? Talk to ICI Homes here.
