Thinking about buying a home in NC? The first thing you have to do is get your Credit Score in order. Often times, especially with First Time Home Buyers, we suggest that they get a Secured Credit Card.
First off… let’s discuss what Secured Credit is.
A Secured Card requires you to make a deposit in order to obtain the credit card. If you are doing this – you are either a parent with a teenager that needs a credit card – or you are re-building your credit score.
Because there are other ways to obtain cash for a teenager – let’s assume you fall into the “other” category.
If you’ve gotten into financial difficulty, and you’ve damaged your credit, a secured credit card can help you build your credit score back up because they report your payment history to the credit bureaus… and we all know that payment history makes up the largest portion of your score.
Remember that when you get a Secured Credit Card – you are not having your credit pulled, so it will not pull your credit scores down!
A secured credit card operates just like a regular credit card.As I said, themajor difference is that you, the card holder, aremaking a deposit as security in case you default on the credit card payments.
The secured cards that I checked would allow you to borrow between 50% and 100% of the deposit you make – so a $500 deposit might mean you have a card with a $250 limit. Does that mean you lost the other $250? NO! It’s on deposit, earning a tiny little bit of interest.
If you are going this route – also remember that we really need three or four trade lines in order to pull your score higher – so one account is not going to do it. It’s a nice start, but it’s not going to pull your scores up all by itself.
We see lots of people who apply for Fingerhut Accounts. They are generally easy to obtain (I don’t get anything for mentioning any of this BTW). If your credit is strong enough to get a secured card with your bank, as opposed to the ones that pop up when you Google Secured Credit Cards you will have much lower fees. Credit Karma also offers some options for Secured Credit Cards.
High Credit Card Balances: The second most important part of your credit score is ratio between the available credit and the amount you owe. This is commonly referred to (on your credit report) as credit utilization. Having high credit card balances (when taken in relation to your credit limit) increases the amount of credit you are utilizing and decreases your credit score. Ideally, credit balances should be no more than 30% of the credit limit.
The most important thing to remember with WHATEVER kind of secured card you obtain is this:
THEY MUST REPORT YOUR CREDIT SCORE INFO TO ALL THREE CREDIT BUREAUS if it’s going to help your credit score! Often times Credit Unions do NOT report to all of the Bureaus – so be careful when considering this.
If you are considering a first time home buyer program for a purchase in NC, and want more information on how to improve your credit score so that you can buy… call Steve and Eleanor Thorne in Cary 919-694-5058. We do a ton of No Money Down Home Loans, and we know all of the USDA credit Score Requirements
Disputing all of the credit on your Credit Report will NOT help you get a mortgage!
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About Eleanor Thorne
I see myself differently than most loan officers in the Cary/Raleigh market. As a rare Cary native, I see myself as an expert on the area, on mortgage industry changes & factors that effect rates! I've lived in Cary since 1968 - and I'm second generation "mortgage." I work with my husband, Steve Thorne Mortgage Loan Originator #60596 Equal Housing Lender
I was able to raise my credit score after I got a couple of secured credit cards who reported to the credit bureaus. Great article and thanks for the write-up!
The required credit scores for mortgages in North Carolina differ based on the type of loan. Conventional loans demand a score of 620, while government-backed loans are more lenient. However, a score below 500 makes mortgage approval difficult.
North and South Carolina FHA loan requirements include: A credit score of at least 580. However, if your score is between 500 and 579, you may still be eligible for an FHA loan if you make a down payment of at least 10% of the home's purchase price.
It's recommended you have a credit score of 620 or higher when you apply for a conventional loan. If your score is below 620, lenders either won't be able to approve your loan or may be required to offer you a higher interest rate, which can result in higher monthly mortgage payments.
The required credit score to buy a $300K house typically ranges from 580 to 720 or higher, depending on the type of loan. For an FHA loan, the minimum credit score is usually around 580.
To qualify for a conventional loan, you'll need a credit score of at least 620, though some lenders may choose to approve conventional mortgage applications only for borrowers with credit scores of 680 and up.
The FHA usually requires two lines of credit for qualifying applicants. If you don't have a sufficient credit history, you can try to qualify through a substitute form.
To qualify for an FHA loan in North Carolina you must meet the above requirements. You must have a credit score of at least 500. Your DTI must be less than 57%. You must be able to put down a 3.5%-10% down payment.
To qualify for an FHA loan with a 3.5% down payment, for example, you'll need a minimum FICO credit score of 580. If your credit score is lower – between 500 and 579 – you may still be eligible for an FHA loan, but you'll need to make a higher down payment of 10%.
The lowest credit score typically required to buy a house is 500 with an FHA loan, which requires the borrower to make a 10% down payment. For credit scores of 580 or higher, a 3.5% down payment is sufficient. Conventional loans typically require a minimum credit score of around 620.
For a conventional mortgage in California, you typically need a minimum score of at least 600. If you qualify for certain government-backed loans, however, you may be able to buy a home with a score as low as 500. Read on to learn about credit scores and how they affect your ability to make a home purchase.
Most mortgages, including conventional loans, require a credit score of 620 or higher. It's possible to get an FHA loan with a credit score as low as 500, but many lenders require higher scores.
The NC 1st Home Advantage Down Payment program grants eligible first-time homebuyers and military veterans $15,000 in down payment aid. It operates like other NC Home Advantage Mortgage™ down payment assistance options, with a 0% deferred second mortgage.
Eligible applicants can receive up to $30,000 of the sales price in down payment assistance in addition to receiving closing costs assistance up to 5% of the sales price. The program will also offer homebuyer education and counseling.
You can borrow $50,000 - $100,000+ with a 720 credit score. The exact amount of money you will get depends on other factors besides your credit score, such as your income, your employment status, the type of loan you get, and even the lender.
Mortgage lenders typically want to see a score of 620 or better before approving a conventional mortgage. There are government-insured mortgages if your score is lower, and if your score is 760 or higher you'll qualify for the best interest rates.
Introduction: My name is The Hon. Margery Christiansen, I am a bright, adorable, precious, inexpensive, gorgeous, comfortable, happy person who loves writing and wants to share my knowledge and understanding with you.
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Eleanor Thorne says
