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First Mortgage Tip: Time to Earn Some Extra Credit

First Mortgage Tip: Time to Earn Some Extra Credit

Once you decide you’re ready for home ownership, it’s a good idea to check your credit score, as it will largely determine the terms of your mortgage. If your credit score is lower than you’d like due to missed payments or maxed-out cards, it’s in your best interest to put off purchasing a home until your credit score rises.

With a few strategies and a commitment to smart money management, you can boost your score and save yourself a lot of money in the long run. Just follow these tips:

FIND YOUR SCORE. Determine your credit score by obtaining a free credit report from one of the three main credit bureaus. Just go to annualcreditreport.com or call 1.877.322.8228. Credit scores range from 300 to 850; a score around 700 is considered good, while anything above 720 is excellent. A score below 620 is generally considered poor. Once you know your starting point you can create a goal credit score and map out a plan of how you will get there.

DON’T CLOSE OLD ACCOUNTS. A part of your credit score comes from how long you’ve had credit, and the longer a card is open, the higher your score could be. Keep old accounts open; they can help boost your score and balance out newer lines of credit.

PAY DOWN YOUR CREDIT CARD BILLS. Start by paying down your cards with the highest interest rate first, and aim to get all balances below 50% of your credit limit. Since 33% of your credit score is based on the amount you owe, work on relieving your debt in any way that you can.

DON’T OPEN NEW CARDS THAT YOU DON’T NEED. Avoid opening new cards at department stores or gas stations for one-time promotional discounts. New cards carry 10% of your credit score, and can bring down the average age of your credit, lowering your score even more.

Speak to one of our Mortgage Specialists about home purchasing options that fit your budget. Call us at 732-225-1505 or learn more at pinnaclefcu.com/myhome. Pinnacle Federal Credit Union is an equal housing lender. NMLS# 423010

First Mortgage: To Buy or Not to Buy

First Mortgage Tips #1

To Buy or Not to Buy….that is the question

Owning a home is often touted as the American Dream. But the truth is: Home ownership isn’t always rainbows and butterflies. For some, renting may actually be a better option, So before you venture too far down the home buying path, first take some time to decided whether or not home ownership is right for you.

Here are some things to consider:

Flexible.
General guidelines dictate that homebuyers should stay in their home for at least four or five years to break even on closing costs and other fees. For those who appreciate flexibility or plan to relocate within the next few years, renting is likely the smarter choice.
Tax Advantages.
Renters do not receive any tax breaks related to their apartment, but homeowners are able to deduct at least a portion of their mortgage interest.
Independence.
When you own a home, you are free to make whatever changes you wish (barring any exceptions from a homeowners association). Such freedoms do not exist for most renters. In addition, homeowners don't have to seek permission from a landlord if they wish to add a pet to their family.
Up-Front Costs.
Homeowners should be prepared to pay a down payment, closing costs and other fees when purchasing a home. For renters, the upfront costs are much lower - usually only consisting of a security deposit that might amount to one or two times the monthly rent charge.
Equity.
Homeowners have the opportunity to build equity in their purchase - a huge benefit when it comes time to sell or if they wish to take advantage of a home equity loan. Renters, on the other hand, will not get back any of the money they pay for the use of their apartment.
Upkeep.
Leaky roof? Failing HVAC system? Broken water heater? As a homeowner, these are your problems - not a landlord's (although a home warranty could help you cover some of these costs.) If you don't feel capable of handling these potential situations or simply wish to avoid regular upkeep such as yard work, an apartment is probably for you.

Speak to one of our Mortgage Specialists about home purchasing options that fit your budget. Call us at 732-225-1505 or learn more at pinnaclefcu.com/myhome. Pinnacle Federal Credit Union is an equal housing lender. NMLS# 423010