2023 is off to a solid start considering where interest rates are at currently.
Many home builders are already booked out for this year. There are still some issues with getting certain materials for new construction and remodeling jobs. Cabinets, doors and windows are just a few of those items. All in all, I feel 2023 should be a good year for the real estate market. Not as good as the last couple of years but holding steady pricewise in our area.
Reviewing your credit score is certainly one place to start. Ideally you want to have a FICO score of 700 or higher. A score of 680 to 700 is still very good. I have gotten buyers financed with credit scores as low as 640, and on occasion with a score just over 620. That was the extreme exception to the general rules. So, what if your scores are not quite high enough, what can you do?
Working with an experienced real estate agent who understands how credit reporting works is one step. Another is finding a good lender who has some experience in helping assist buyers in improving their scores.
Most seasoned realtors have one or two lenders they know and trust to assist in this process. It usually is not a quick fix in most cases, however, every situation is different and requires its own set of strategic moves to make the biggest impact in the shortest period of time.
Having high balances on credit cards or store charge accounts is very common and has a huge impact on your credit scores. Often it is much worse than missing a payment. Missing a payment and being more than 30 days late will likely drop your score 70 to 80 points. Having high balances can bring it down 150 to 200 points.
The good news with problems is there are many creative ways to address the situation, I have even seen it resolved by rolling the entire balance of two credit cards into the mortgage of the property being purchased. There are several other methods that take a little longer or you can always shake the family tree to see if a family member can help out temporarily.
Delinquent items are much trickier, especially if they have gone to third party collections. You really have to study your credit report to see when these items are reported. These are always handled on a case-by-case basis and almost always individually. You can negotiate these down and sometimes get them to remove some of their reporting dates to the credit bureaus.
Paying all of them off is not always a good idea as one might think. It is how they are reporting that means the most. You could have an old account in collections, but it hasn’t been reported in five or six months or maybe longer. By calling them and possibly paying it off it is likely it will get reported again and refreshed as a new negative item.
Medical bills are another common problem we find. Generally, these are fairly easy to work with and once paid you usually can negotiate the removal from your credit report. They can also be explained to a lender as to what the medical issue was, and the surrounding circumstances that caused the delinquency to occur.
The lender can then run your credit and take those delinquencies out of the equation and get a new updated score that might put you over the top and get your approval to move forward.
There are many different ways to attack any or all of these issues. The key is to work with someone who has some knowledge of how to navigate down those paths and assist you in doing the right things. A knowledgeable lender and experienced real estate agent are a great place to start if you find yourself in this situation. Don’t let it overwhelm you or discourage you, just take it one step at a time and you will achieve your goal of owning your own home. <
This article was written by Matthew Trudel, Owner/Broker of Five Star Realty, Windham, 207-939-6971.
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