Going through a financial trauma, such as a foreclosure of bankruptcy, can be devastating for your credit score, and subsequently your chances of qualifying for a home loan. However, according to Realty Times, there are a number of ways to get your finances back on track.
According to the news source, not only can such an event have a negative effect on your finances, but it can also hurt your self-esteem. But you can start rebuilding your credit by maintaining a healthy credit profile, which can result in more financial confidence.
Currently, the government has installed a number of programs to help struggling Americans who have lost their homes regain homeowner status. Through the Federal Housing Administration, homes can be bought with a down payment of an affordable 3.5 percent, while many other private lenders require payments closer to 20 percent.
You need to start by rebuilding your credit, says Realty Times. A great way to start doing this is by making monthly payments on time for your credit card bills as well as general loan payments. You credit score is boosted by the number of positive accounts you have, so just because one line of credit fell flat, doesn’t mean the rest of them have to suffer. Even after losing you property, the more accounts you stay on top of will help raise your score.
Additionally, if you have multiple credit cards, you should try to pay them down, but stay away from a zero balance, says the news source. If you maintain a balance that is less than 30 percent of your available credit, it can be a major boost to your credit score, as it indicates to lenders that you are able to borrow money and consistently pay it back on time.
Meanwhile, even though there are available options to purchase another home with a low down payment, it doesn’t mean you shouldn’t try to save as much money as your can, advises Realty Times. Even if you get an affordable down payment of 3.5 percent, you will most likely be required to pay a number of closing costs and other fees associated with the loan. Examining an FHA mortgage calculator can give you a better idea of the costs you can expect to see.
Owning a home is a major financial step and should be part of your overall financial plan. After making a mortgage rate comparison to find the best loan, Freedom Mortgage can help you stay on top of your mortgage.
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