Buying a house, needs some financial Tips?
Hey guys, i plan on buying my first house in the next month or so...
what i want to know is currently i have 3 credit cards, and they are all pretty close to maxed out....
I just paied 2 of them off comletely, and canced one.. i paied about 1/2 of the other one off.. and plan to get it at 0 before i apply for a morgage
but i want to know, how does this affect my credit?
I want to keep one open for emergancys and stuff...
is it bad if i cancel the other ones? i hear 2 things, it looks bad than you canceled, or it looks good because it doesnt look like you have that much open credit to use...
I would just like to know what the best thing to do is
any tips would be great!!
- SugarCubeLv 41 decade agoBest answer
Make sure that you make all of your payments on time and don't miss any of them.
- 1 decade ago
First, congratulations on preparing to buy your first home - that is great!
Second, its wonderful that you have chosen to be smart about your credit cards! Now, about those cards: Do NOT cancel the one you are paying off. Here is why - having the availability of credit without using it shows you have self-control over your spending. It also shows that you can exercise that self-control over a period of time if you have a card for a while. (24 months is a big deal in credit) So, you cancelled one, o.k. Leave your other one open for the sake of your credit score.
For other tips:
Keep the same job. Having the same job for 2 years or longer is the best.
Pay rent by check. This way you are able to prove you paid on-time and will pay the lender on-time for your mortgage.
Have money in the bank. If mom and dad or anyone not going on your home loan are listed on your bank account, get them off. The reason? If the bank account is in the name of you & your mom, the lender may feel that only part of the money in the account is yours.
Figure out how much you can ACTUALLY afford each month and remember that you will have homeowner's insurance and real estate taxes to pay in addition to your mortgage. Then, even if the lender says you can pay more per month, stick to your number.
Good luck & enjoy your new home!
- 1 decade ago
Keep accounts open, even if you're not using them. Have accounts open for a long time, even at a $0 balance helps you. Pay off what you need to ASAP. Having cards close to being maxed out hurts your credit. Go to www.annualcreditreport.com and pull your credit reports. It's free and the only site you can get your report free without enrolling in something. You can purchase your credit score for under $10. Get your report and see what that says, when you're ready to move on contact a good lender, see if someone can refer one to you, and talk to them about what's on your credit report. Interest rates are low now, so it is a good time to buy, as long as you plan on/can stay in the home for at least 5 years.Source(s): I am a Realtor in Virginia
- 1 decade ago
Credit scores are based on the amount of credit you have vs. how much of it you are using. Do not close all of your accounts! If your credit limit, or "available credit", is zero, that's not exactly a good thing. You want to have a credit limit that is hardly being used (I think less than 7% or less usage is the estimate I was given for "responsible usage).
It also tends to look better if you pay them down steadily, rather than paying off the whole thing at once. The idea is to look "responsible", not desperate. If you spend the max and then lump it all off at once, it doesn't look as responsible as someone who has a long history of paying it down steadily on time. Building a history of paying off on time is good. If there's nothing to pay off, you're not building that history.
I've read my credit report twice over the last two years, and both times I've gotten score penalties for using 50% of my limits, and not having a long enough history (and I've had my accounts open for almost five years!).
Also, if you pay a card off to zero, the lender can close it within a year on you for no usage, which also lowers your "available credit". (It's GOOD to have available credit... It's bad to be using over 50% of it! -- two different ideas).
Good luck buying your house! I hope you find a good deal! I hope to be in your shoes in the next three months, myself. ;)
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- Anonymous1 decade ago
It only looks bad if you don't pay and cancel - by paying them off you're showing the lender (who you get your mortgage from) that you are responsible with your debt repayments.
Looks like you are on the right track - pay them off, keep one with a lower limit and low interest, then apply for your mortgage. Make sure you don't have any other outstanding debts and check your credit rating before you apply for your home loan - you can do this through a number of websites depending on your location.
Good luck - seems like you're being very responsible with your finances so keep it up when you get your mortgage!Source(s): http://www.yourmortgage.com.au
- godgedLv 71 decade ago
Don't cancel your accounts. For your credit score, they want to see that you have available credit and closing down those accounts won't help your position. Once you have your house (the transaction is closed, the deed has recorded and the loan has funded), you can do anything you want with the the zero balance cards.
Congrats in getting yourself in a great position to obtain a loan. Good luck!Source(s): Oregon Realtor
- beverley1156Lv 61 decade ago
as long as you have not defaulted on your credit cards,it gives you a good credit history.For your own sake,get rid of the balance and keep the best card with the lowest interest for emergencies.There are so many hidden expenses in buying a home that you need to be debt free when you start out.Good luck with it all.Source(s): experience
- Anonymous5 years ago
The best things is go for credit score or report and it will show your financial statues and I thinks that's best way.
- Anonymous1 decade ago
Cancelling credit cards hurts your credit, it lowers your available credit and destroys your oldest credit history. It's a terrible idea!
Read this please and tell everyone else to read it too: http://wefixrates.com/credit_suicide.htmSource(s): Mortgage Broker - http://WeFixRates.Com