Can you help this first time home buyer?

Question

I am trying to get ready to buy my first home. I received three credit ratings (scores). These scores range from 705-711. What can I do to raise this or is this score okay as is? I will be paying my car off 1.5 years early. Will this bump up my credit score? How much money should I save prior to buying my first home? When looking at homes, how can I tell if the home is going to be a good investment?

Answer 1

You should really get a quick read book from the local library as to how to pick out a good investment for a house, but the rest of it I can answer. There is so much specific info that to put it all here would cause a time out error.

705-711 is good. if you pay off your car then your score will get higher the closer you get to paying it off. Once it is paid off,however the account will be closed and it will drop your score. Schedule the paying off of your vehicle within the 6 month time frame of buying the house.

You need minimum of 5 percent down saved up to a fair amount around 15 percent. The more you pay down the cheaper your monthly payments will be.

All of these are specific really to the amount you actually pay for the house. I would say for advice, make sure the foundation has absolutely no cracks in it, and make sure there are no brown spots on the ceilings, walls or floors. It is a sign of water damage. Make sure you hire an inspector to come out, and a surveyor.

Answer 2

Well, your credit score is pretty dang good already.  I'm not sure about the car bumping it up though.  I don't think you should worry about it because 705 is a good rating.  The amount you should save depends on the amount of the house and the types of loans in your state.  I live in Cali and they aren't giving loans for more than like 93% I think.  Which means your down would be 7% of the total cost of your loan.  Then there are closing costs, which are a bit pricey, but generally people ask the sellers to cover closing costs, which on a 200,000 house could range from 10-15,000 dollars.  They can also be incorporated in to the loan, so if your house is 200,000 and you want to incorporate the closign costs, you make your offer for like 210,000 and ask the sellers to cover closing...if that makes sense.  However, the seller, in Cali, is can only give a certain percentage of allowances...which is to say that they might not be able to cover ALL the closing costs, but usually most of them.  As far as investments, I can't say, I bought my house to live in, so I wasn't concerned with investments, I just wanted a house we both loved, would accomadate our needs and was within our price range.

Answer 3

You have some good questions but complicated so let's look at each one at a time.  I am a loan officer and credit repair specialist so I am qualified to answer them.

What can I do to raise this or is this score okay as is?

In today's market lending guidelines have changed.  What used t o be acceptable credit of 620 has changed to 680.  Anything Over 700 but under 720 is considered good and established credit.

I will be paying my car off 1.5 years early.

Will this bump up my credit score?

By overpaying your car and making larger payments then required on a consistent basis will increase your score quickly, but once it is paid off entirely your score will drop because you no longer have an active trade line.  You will need three open and active lines that are 1 year old when you apply for a mortgage.

How much money should I save prior to buying my first home?

5-15%  There is a range there because the more you have to put down on the house, the lower your interest rate and PMI will be.

PMI is Private mortgage insurance.  That is what the government forces you to pay if you are over 80% of the equity of your home.  This also applies to FHA but it is  often built in to the program.

When looking at homes, how can I tell if the home is going to be a good investment?

I am assuming that you mean investment for your money and not investment property.

There is no way of knowing, but your best way to guess would be to get a hold of an appraiser and have him check your neighborhood to see what house has grown in value and what houses has gone down.  One sale of a house will determine the value of a neighborhood.  You will want an area that is apreciating and not depreciating.

Answer 4

705 to 711 is a pretty good credit score.  (could always be better)  The best way to raise your credit score is to buy things on credit and pay them off on time.  Yes paying off your car well help a little (as long as you make the payments on time) .

Now days its kind of tough to save up for a down payment because homes are so high.  I think getting 5% (at least) of the home price is what people try to get.  But the more downpayment you can make the lower your monthly payment well be.

you can't really tell if a home is going to be a good investment or not.  You just buy low,  if you get a good deal on the home then it should go up in value in a number of years.  (its just a matter if when you get ready to sell if the market is bad again)