I would like to get input from everyone on what I need to do over the next twelve months to qualify for a mortgage. My scores are good, high 600+. However, I have high utilization and a relatively short credit history - my oldest account is 7 years old and the avg age is around two years. So, I guess I need to know what type of credit-related guidelines I need to follow to qualify for the best mortgage rates in 12 months. When should I stop applying for credit? What should I get my utilization % down to? What are common debt ratios being used today? And so on. Thanks.
Assuming no surprises (collections or liens), your utilization is a factor twice. First, the ratio affects your FICO. Assuming it's good enough, the other thing is how much debt you incur to pay the minimums, which overlaps into how much they'll allow for that. Sounds like you'll have to balance money down vs. outstanding balances. All you need is a loan calculator and a few spreadsheets, armed w/some terms from potential lenders.
You MUST be prepared to go on a CASH ONLY BASIS (YUCK) the day you sign up for an offer on a house... DON'T APPLY FOR ANYTHING NEW...probably should not even apply for anything NEW even a month or two before... PAY DOWN ALL YOU CAN...AND PUT EVERYTHING YOU MAKE IN SAVINGS/CHECKING... You need "STUFF" for the house...WAIT TILL YOU HAVE THE KEYS IN YOUR HAND!!! Have your SISTER/BROTHER/PARENTS buy "STUFF" for you if needed and BT the payment to their account AFTER YOU HAVE THE KEYS!!! LIVE REAL CHEAPLY WHILE IN THE LOAN PROCESS...NO DINNERS OUT...TAKE BAG LUNCH TO WORK...PB&J...TUNA...TV DINNERS...READ THE FOOD SALE PAPERS...
OPT OUT !!!! Check your reports VERY carefully - do NOT apply for ANYTHING new unless you HAVE to, this includes insurance. Check on line for property sales in the area you are interested in, check online under the buyer's name for recorded documents and see what Mtg. lenders are giving the best deals.(mtg $ % to purchase price) Be VERY stingy with your $$,pay down your debts as much as possible,save as much as you can for down payment and closing costs.
