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Published on March 30th, 2013 | by robynsorenson

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Understanding Mortgage Down Payments

Loan picYour mortgage down payments are based primarily on your credit score, to read more about mortgage down payments, click here. Your credit score will determine the amount of the monthly mortgage down payments as well as the interest percentage you pay. You can use a mortgage calculator online before you apply for a mortgage to get a decent idea of what you would pay with your existing credit score and how much you would pay if you waited six months to improve your credit score. Click here to use your mortgage calculator.

There are many simple steps to improving your credit score, these are a few of the most important ones to keep in mind:

 

  1. First, you need to make loan payments for the correct amount, on time each month.
  2. You can avoid overextending any existing credit lines. If an unsolicited credit card arrives in your mailbox, avoid the temptation because it will only harm your credit.
  3. Do not ignore any overdue bills. If you find that you are having trouble repaying any debt, call the company to make arrangements. Explain your situation and they will likely be flexible with you. Remember, they want their money one way or the other. If you ignore them, they have no way of knowing what is happening but if you call and make arrangements even for a monthly minimum payment, they will be happy to work with you.
  4. You should understand the type of credit you currently have. If you have credit from a financing company it can affect your credit score negatively.
  5. Next, you should ensure any outstanding debt is kept as low as possible. You should not extend your credit close to the limit as this is viewed poorly on your credit score.
  6. Make sure you limit the number of credit applications you submit at any one time. Many times your credit score is viewed, it is considered a bad thing.
  7. Lastly, remember that credit is not built in one day. It is actually in your best interest to have a long history of decent or good credit rather than a short period of amazing history.

 

You should keep an eye on your credit utilization ratio. It is important to keep your credit card balance between 15-25% of the total credit available on each. You should pay your accounts on time and if you are unable to do this, make sure payment is received no more than thirty days late. To get that score to soar quickly, don’t simply make your house payment, go above and beyond by paying more. This over payment can be as low as ten dollars extra a month, but it shows the lender that you are committed and results in a higher credit score, quicker. If you plan on applying for a loan, wait six months during which time you should check your credit score and do whatever you can to increase it even by one point. For more information, click here.


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