Sunday, July 1, 2012

6 Must-Dos for Homebuyers

You might be ready to buy a home, but are you armed with the knowledge you need? Do you know about credit score requirements? Are you familiar with flexible standards on Federal Housing Administration loans?
Whether you are a first-time homebuyer or an experienced owner, buying a house requires a "preflight check".
Here is a six-item checklist, including tips on two types of savings you need, plus advice about what's more important than buying a house for its resale value.

1. Strengthen your credit scoreStrengthen your credit score

It's a brave, new world with respect to credit requirements for mortgages.
One old rule still applies: The higher your credit score, the lower your down payment and monthly payments.
Below 660 or 680, you're either going to have to pay sizable fees or a higher down payment. And that's pretty much the cutoff score for getting a mortgage.
While there are many qualified borrowers in the 580 range, the market today is probably (looking for) 640 to 660, at a minimum.
On the other end, a score of 700 to 720 will get you a good deal and 750 and above will garner the best rates on the market.
Improve your chances by: pulling your credit reports and ensuring you're not being unfairly penalized for old, paid or settled debts.
Stop applying for new credit a year before you apply for financing. And keep the moratorium in place until after you close on your home.

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