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  • Managing your Credit

    Whether you’re a first-time home buyer looking to refinance your existing mortgage, or in the market for a second home or investment property, your credit status is one of the most important financial components that you can have. Not only does it offer a favorable insight into how you handle your personal financial matters, it can also make your life considerably easier and much more convenient. Taking a loan is a prominent way to pay for large purchases, especially home purchases, and your credit rating determines the amount and the loan that the banks are willing to offer you. Your credit should be solid.

    A good start to establishing strong credit is to efficiently manage any and all credit card accounts. It is important to have created a credit history with a credit card. Contrary to popular belief, it is not necessary to open four or more accounts.  If you don’t have much experience using a credit card, get one now and charge some large purchases then pay them off immediately.

    Well-managed car and student loan records will help your credit as well, and should be paid off first.  Debt-to-income ratio is what your Guaranteed Rate lender will look at to determine how large of a mortgage you can afford. To calculate this ratio, add all monthly obligations then divide the sum by your monthly income. Your debt should not take up more than 20% of your pretax income, and no more than 40% when you add in your mortgage payment.
    Most importantly, no matter your short or long term goals, is to pay all bills on time. Saving up for your down payment for an extended period of time helps as well. Contact Guaranteed Rate for more information or to speak with a licensed loan officer.

    Oct 8 2010