A good credit score can mean lower mortgage rates, higher loan offer amounts

The significance of a good credit score should not be underestimated when it comes to buying a home. Besides having an impact on the mortgage rate that is offered, a good credit score can also qualify home buyers for a larger loan and as a result, a better home. Since the majority of young home buyers have average credit scores in the 650 range, J.Christopher Real Estate Group would like to share some tips that can help prospective buyers boost their credit score quickly.

“One of the first things we ask home buyers before taking them on tours is, ‘how is your credit,’” said Jarrod C. Lewis, owner of J.Christopher Real Estate Group. “We have worked with individuals who thought their finances were in order only for them to learn something damaging came up in their credit report.”

For this reason, Lewis tells individuals who are looking to buy a home to know their credit scores well and to flag anything suspicious to credit agencies as soon as possible. While a bad credit score will not automatically disqualify people from buying a home, it can cost homeowners thousands in the long run.

If you have a credit score that is below the national average and are looking for a new home, we encourage you to read the tips below so you can improve your credit score fast.

Keep your balance-to-limit ratio low

The balance-to-limit ratio refers to the difference in money owned versus the total credit limit available on a card. For instance, owing $500 on a credit card with a $10,000 limit would be seen positively. It is imperative to keep these balances in check.

Flag any errors in your credit score

Home buyers should resolve any glaring errors in their credit reports because it can influence their pre-approval offer. Sometimes an amount owed that was completely paid off will show up in a report.

Pay your bills on time

Home buyers may not know that late rent payments, car payments, and student loan payments can appear on credit scores. Since you don’t know what will be reported, it is better to assume that all late payments are being monitored.

Aim to receive pre-approval offers within 30 days 

When you are shopping for mortgage rates from various lenders, home buyers should aim to acquire offers within a month so that the credit inquires themselves do not lower your credit score.

Every home buyer is unique when lenders are determining which buyers are qualified for a loan. Some will have a 20 percent down payment saved up and bad credit, and others may have the complete opposite scenario. And in both cases, they could still be qualified for a mortgage. Speak with a J.Christopher Real Estate agent at 401-830-6906 today to be one step closer to living in your dream home.

The right time to buy depends on the individual

With property values in Rhode Island on the rise, many families may falsely believe it is not the right time to buy a home. But a historical look at Rhode Island’s real estate market indicates the housing market is simply returning to its true value and it is here to stay. As you determine whether buying a home is the right call, J.Christopher Real Estate Group would like to remind future homeowners what real estate professionals already know: the right time to buy a home is when you are ready.

The median price of a home in Rhode Island is hovering close to $260,000,  RI Association of Realtors stated. Most of the increases have been attributed to a shortage of available homes, which fell from 3,569 to 3,190 from a year ago. Other large factors that are out of buyers’ control is economic growth.

“It is rare for individuals to capitalize on real estate if they are only relying on current market conditions,” said Jarrod C. Lewis, owner of J.Christopher Real Estate Group. “The real estate market goes through ups and downs, but generally home prices tend to increase as the economy improves.”

From a historical perspective

Before the banking crisis of 2008, median home prices in the Ocean State reached $282,900. Shortly afterward, prices reached a low of $190,000 in 2012, according to the Providence Journal. Some people may be concerned the same thing will happen again, but that scenario is unlikely to happen a second time because banks have drastically changed their lending practices. Specifically, subprime loans comprised 5 percent of the total market in 2015 compared to 20 percent when the housing bubble burst.

Another reason why home prices are likely to remain the same is because data from the Census of Housing shows Rhode Island home prices have traditionally increased. In 1940, home prices in Rhode Island were $40,000. Prices reached more than $60,000 in 1960. And in 1990, prices reached $170,000.

“As people earned more money and the population grew, home prices increased and that is what is happening now,” Lewis said. Furthermore, financial experts anticipate the U.S. economy to remain healthy in the coming years. Rhode Island in particular saw its economy perform better than a dozen other Northeast states, according to the Bureau of Economic Analysis.

Key indicators show that the median price of homes in Rhode Island are likely to remain the same or could increase further. For these reasons, families should go into real estate negotiations with the understanding that they are buying a home for an amount closer to its true value.

Home buyers have several options for financing a home that were not available many years ago.  Whether you are looking for a single-family unit to create lasting memories or a multi-family house to build your real estate portfolio, J.Christopher Real Estate Group can help you reach your goals. Speak with one of our agents at 401-830-6906 today to begin the home buying process.