As a long time Southern California Realtor® one of the most common questions that we’ve been asked by home buyers is “do I need credit to buy a home in Southern California?” and the answer to this question depends on the following circumstances:
You’re Paying Cash for a Home
If you’re paying all cash for a home then you don’t have to worry about needing credit to buy a home because you will not be getting a mortgage and don’t have to worry about needing a credit score to qualify for a mortgage loan.
You Will Be Getting a Mortgage Loan to Buy a Home
Most homebuyers in Southern California will be getting mortgage loans to buy homes and in this case having credit is necessary because lenders will look at your FICO score to determine how much money they should lend you.
Keep in mind that even if you have a low FICO score that’s under 600 you still may be able to qualify for a mortgage loan especially if you choose a HUD or FHA loan.
Before applying for a mortgage loan you should consider following these steps:
Step 1 – Lower your debt-to-income ratio by paying off old debts like an auto loan, student loans or credit cards.
Step 2 – Use credit smart and pay balances to reflect that you’re only using 30% of your credit with each account.
Step 3 – Contact a mortgage broker or lender to search for the best mortgage loan.
Step 4 – Once you qualify for a mortgage loan don’t change your job or take on any extra debts like an auto loan because this will hurt your debt to income ratio and could ultimately hurt your chances of staying qualified for a mortgage loan.
Step 5 – Don’t close credit accounts! Many people make the mistake of closing old credit accounts when leaving those accounts open actually helps you more than hurts you.
At Fred Sed Realty we are your total resource for buying a home and we can help you with all of your needs from helping you get your finances in order to buy a home, connecting you with the right mortgage lender to showing you homes for sale in Southern California that are within your budget.
Contact us today by calling (800) 322-4643 or connect with us through our website.