The Real Estate Browser Volume 9, Issue 1 | Page 12

12 — Say you saw it in The Real Estate Browser of Lynchburg — Volume 9 Number 1
www.LynchburgRealEstateBrowser.com
Before You Can Buy a Home, You Must Establish Good Credit
By Sherry Brady, Branch Manager, Summit Mortgage Corporation
Have you ever heard the old
saying “you have to have money
to make money”? The same is
concept holds true with many things in life. It’s
easier to get a job, if you already have a job, or at
least some work experience. And the truth that I
encounter every day is that it’s a lot easier to get
credit, if you already have credit; particularly if
the credit you are trying to get is a mortgage loan.
If you’re hoping to buy a home someday, or
make any purchase that requires the use of credit,
you need to build a credit history, and it’s criti-
cal to understand that you can’t wait until the day
before you start looking at houses to think about
this; you need to be working on your credit pro-
file month’s in advance.
There are three components to getting
approved for a mortgage loan: Credit (will you
pay), Capacity (can you pay), and Collateral (is
the home you’re buying worth the price you’re
paying for it). All three need to be acceptable to
be approved for a mortgage loan. When it comes
to determining if you have an acceptable credit
history, a mortgage lender is looking at your cred-
it score, but they also want to see at least two to
three lines of credit that you’ve paid on time for at
least a year.
If you have two or three accounts, which are
open, active, paid on time, and not maxed out,
then a good credit score will usually follow. Your
credit score is based on five factors:
• Payment history (do you pay your bills on
time);
• Amount owed (are your credit cards maxed
out);
• Length of credit history (how long have your
managed credit);
• Credit mix (do you have various types of credit
such as installment loans and credit cards); and
• New credit (have you recently opened several
new lines of credit).
Of those five factors the most important are
the first two: you must pay everything on time,
and do not allow any credit card balance to
exceed 40-50% of the card’s limit.
Alternative credit is an option, in some cases,
if you don’t have any traditional credit. For this,
you should have proof of paying rent on time (if
you rent), and at least two other things you’ve
paid regularly and on time for at least a year, such
as cell phone, electric, cable, internet, insurance,
or even a regular history of savings or tithing.
These days, we have plenty of online tools
designed to make the process of getting your loan
easier than ever before, but it still requires some
thought and planning on your part. Start by
giving us a call or coming in for a free planning
meeting early in the process. Go online to www.
LynchburgLender.com or call us at 434-237-1027
to get started with one of our highly qualified
lenders. While there’s much to think about, once
you have an experienced guide you can relax a lit-
tle, enjoy the journey, and start picking out your
paint colors!
Summit Mortgage Corporation NMLS
#1041, nmlsconsumeraccess.org, Equal Housing
Opportunity.