Credit Help: 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 homebuyers 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.

Professor Jeanette Fisher, author of Doghouse to Dollhouse for Dollars, Joy to the Home, and other books teaches Real Estate Investing and Design Psychology. For more articles, tips, reports, newsletters, and sales flyer template, see http://www.doghousetodollhouse fordollars.com/pages/5/index.htm

---

How to Use the Internet to Help Your Apartment or House Hunting

So you are looking for an apartment to rent or... Read More

Investment Real Estate: An Inexpensive Way To Get Started

If you are considering getting involved in investment real estate,... Read More

The Many Benefits Of Lease Purchasing

Lease Purchasing affords wonderful benefits and opportunities to sellers, buyers,... Read More

Lease Options or Rent to Own?

Finding a rent-to-own house is one of the many ways... Read More

Best Places to Retire

Places to Retire: Popular Doesn't Always Mean "Best"Las Vegas, Nevada;... Read More

Home Owner Association Restrictions ? Read Before Buying

Many communities have associations for homeowners, property owners, condo owners,... Read More

New Housing Starts Do Not Guarantee Aftermarket Sales

We have been studying a trend of new home buyers... Read More

How To Simplify Your Real Estate Buying/Selling Experience

Today's real estate consumer has a lot to consider during... Read More

Negotiating and Sales Skills Are Critical

When I first started getting active in creative real estate,... Read More

FSBO - Selling Your Home FSBO (for sale by owner) ? Is It Worth It?

FSBO, what is it? FSBO means For Sale by Owner,... Read More

If You are Hiring a Neighborhood Specialist to Sell Your Home, there are Some Things You Absolutely

My husband and I were eating breakfast at the Good... Read More

What are the Elements in Real Estate?

Each element has a specific color associated with it. Because... Read More

Rental Properties: 10 Ways To Increase Income

What if you want better cash flow from your rental... Read More

Real Estate Website Marketing - 5 Steps to Crushing Your Competition and Doubling Your Business

Getting your real estate website more traffic is easy if... Read More

Property Investing ? Port Melbourne Life on the Edge

Property investing prices pick up following a cooler winter last... Read More

Property Investment - Buying A Holiday Home in Cyprus

Cyprus is fast becoming a property hotspot for thousands of... Read More

Be A Realtor With Curb Appeal

Are you a realtor with curb appeal or are you... Read More

Five Things to Help Sell Your Home Fast, and For More Money

Selling your home requires some thought and a clear plan... Read More

Real Estate Development Marketing

A Specialist Article For Those Interested In Real Estate Development... Read More

Real Estate Professional in the Palm of Your Hand

GETTING THE MOST FOR THE LEASE-TRACKING YOUR REAL ESTATEIf you... Read More

Youre Not Paranoid: The House Really Hates You

If you've just bought a house, you may be able... Read More

San Diego Real Estate, Million Dollar Homes

San Diego county has always been known for its Luxury... Read More

Cashing Out of Preforeclosures - Exit Strategies for Maximum Profit

One of the quickest ways to real estate profits is... Read More

If You Move Yourself

You'll want to take some items in your own car... Read More

The 5 Biggest Mistakes Made When Getting A Business Appraised

Most business owners will, at some point, want or need... Read More

Selling Your Home ? Be Sure It Shows Well

Whether you are selling a house, townhouse, condo or apartment,... Read More

Budgeting Your Log Home - Creating a Checklist

If you've read my first article, BUDGETING YOUR LOG HOME:... Read More

Building Your Dream Home - Part 1

For most of my adult life I had thought about... Read More

How to Become a Successful Real Estate Developer

Real estate investment and development has never been a more... Read More

Real Estate Investing - The Marvel Of Home Depot And Lowes

Repairing a rental home (or your own home) use to... Read More

Personal Debt Can Disappear When You Set up a New Business

I teach students how to set up a new business... Read More

Cutting Edge Real Estate: Is There Anything New? Part 1

The world of real estate has pretty much stayed the... Read More

3 Mistakes to Absolutely Avoid in a 1031/TIC Exchange

We've all made bad decisions in the past. Don't you... Read More