Entry to the Anchorage Alaska Real Estate Market Begins with Credit Readiness
by Dan Wolf
on Friday, February 15th, 2013 at 11:41am.
It’s snowing and the forecast for the next few days calls for more of the same. It’s hard to imagine that spring is just around the corner. Not only will spring bring more hours of daylight and warmer temps but it also ushers in the busiest time for real estate. Experts are already predicting that this spring will be important for the industry because mortgage rates are still low and housing prices are creeping up in some areas. Looking closely at your credit and financial landscape is a critical first step if you are considering a jump into the Anchorage, Alaska real estate market.
It is very important to know what is on your credit report before lenders view it. Errors on your report can impact the interest rate you will qualify for and could even derail your chance of getting approved for a loan. Look for accounts that don’t belong to you and collection or negative marks that are older than seven years. Creditors are interested in how you manage credit and if you pay bills on time in a consistent fashion. The three nation-wide credit reporting agencies Equifax, Experian, and TransUnion are required to provide you with a free copy of your credit report once every 12 months. If your report doesn’t read well you may want to rethink your timeline of home ownership, see the article on credit repair at the Federal Trade Commission website for more information.
Your credit score is that three digit designation used by lenders to gauge your credit worthiness. It determines the rate and terms that you can qualify for; the higher the number the better the rates and terms. Some lenders will pull a credit score at the time you apply and just before closing so it is important to avoid reductions during this time. This includes opening or closing accounts or any late payments on existing accounts. The credit score formula can also take into consideration how much of your available credit limit is being used with credit cards, less is better. There are several different credit scoring formulas but the one most often used is the FICO. There are numerous websites that will allow you to self-check your current FICO, see the NextAdvisor report to compare these sites or google FICO credit score.
The other important piece of this process is to be sure you have enough money set aside for a down payment. A larger down will mean a lower monthly payment and savings over the life of the mortgage. The type of loan you are getting and the purchase price of the home will have an impact on the percentage you will want to put for a down payment. Keep in mind that any amount less than 20% will require you to pay for private mortgage insurance. PMI protects the lender in the event that you default on the loan.
All of this can seem pretty daunting, especially for a first time buyer. We can help you navigate the financing path, figure out your budget and most importantly help you find your new home. Contact us today to start on your journey to home ownership.