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Welcome!
Credit Help Tips
In This Issue:
Buying Real Estate -- Not the Same as Buying Cars
Buying Real Estate -- Not the Same as Buying Cars
Credit for Buying Real Estate is Different than
Credit for Buying Cars
Forget what you've been told about credit.
You may be shocked at some of these tips because this
information runs contrary to what other so called
experts tell you. Qualifying for a real estate purchase
requires different credit than automobile financing or
retail credit.
Common Credit Myths
1. You need to pay off your credit cards
2. You need to close credit accounts
3. You need perfect or good credit to buy a house
Credit Facts
1. Paying off your credit cards lowers your credit score
2. Closing credit accounts lowers your credit score
3. You don't need perfect credit to buy real estate
Why not pay off credit cards? Because paid off credit
cards do not compute in your credit score. Real estate
lenders like to see open, active accounts with low
balances.
Why not close accounts? Closing accounts before the
payoff often costs consumers more money because credit
card companies raise interest on closed accounts.
You can buy real estate with poor credit, but you will
save thousands in loan costs if you maintain good
credit. A bad credit report leaves home buyers with
sub-prime loans which have higher point charges,
prepayment penalties, and higher interest charges, which
therefore cost more money. For instance, a mortgage loan
of $150,000, 30-year, fixed-rate mortgage, interest rate
of about 5.72 percent costs around $870 a month; poor
credit scores raise the interest rate over 9 percent and
the payments over $1,200.
As you see from these payment differences, good credit
means that you can finance a more expensive house with
the same income, or save $330 each month.
Credit Requirements for Mortgages
Credit needed to buy real estate is not the same as good
credit. Besides your credit score, mortgage lenders
consider your debt-to-income ratio and other credit
matters, unlike other credit grantors. Your
debt-to-income ratio is the comparison of mortgage
payment, including taxes, interest, and insurance to
your total gross monthly income. Real estate lenders
also consider your employment qualifications and your
overall debt ratios.
Understanding the difference between good credit and the
credit needed to obtain real estate financing helps you
buy houses!
(c) Copyright 2004, Jeanette J. Fisher. All rights
reserved.
Jeanette Fisher, Design Psychology Professor,
expanded her innovative interior design methods into
real estate investing. She is the author of interior
design psychology, real estate, and credit books. While
buying and selling millions of dollars worth of real
estate, the Fishers were forced into becoming credit
experts. Get the credit you need to buy real estate:
visit new Real Estate Credit Help Center http://www.recredithelp.com
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