by Katie Conroy (November 12, 2020)
Even when the housing market is looking great, many aspiring home buyers face a particular obstacle: debt. Whether it stems from financial irresponsibility, unexpected medical bills, or any other source, debt can quickly damage your credit. And without a good credit score, your chances of qualifying for an affordable mortgage are slim.
However, did you know that there are ways to manage your debt so that you can build your credit back up more quickly? You may not be able to achieve a perfect credit score of 850 in the next year or less, but you can make strides toward improving it significantly. Then, you will be in a better position to get a mortgage you can live with.
Here are seven quick debt-management tips for those who want to make a home purchase in the next six months to a year:
1. Start preparing your current home
First of all, if you already own a home, you will likely need to sell it before making the purchase of a new one. And in order to do that, you will need to make sure it’s in great shape so that it impresses buyers and brings the highest price possible. Along with decluttering, cleaning, and staging your home, consider any DIY repairs that you can take on.
Of course, if you don’t have the necessary skills and knowledge to do them safely, you will need to work with seasoned professionals from May Custom Home, your one-stop-shop for home improvement in Tampa!
2. Seek debt relief
If you are pretty deep into debt, look at the debt relief and assistance options available in your state. By hiring a debt relief specialist, you can begin taking the reins from your debt and improving your credit score, which will get you closer to the goal of that home purchase. Consider determinants like the amount of debt you’re dealing with, your ability to pay the debt back, and your job stability when deciding what route is best.
3. Seek credit counseling
For milder debt, credit counseling might be enough to help you get above water. A qualified credit counselor can help guide you through the process of paying back your debts, managing your budget, and improving your credit score.
4. Pause any unnecessary expenses
One of the most practical steps you can take to tackle your debt is to cut expenses. Look at your monthly budget, and single out any expenses that are not essential to your health and well-being. Then, put a hold on those expenses until further notice. This might include canceling that Hulu subscription, cooking at home more often, and/or revisiting your insurance policies.
5. Get your credit reports
In order to find your FICO credit score, you need to get credit reports from Equifax, Experian, and TransUnion. Just be sure to dispute any errors found on any of the reports so that they can be corrected.
6. Consider a VA loan
If you’re a veteran, look into VA loans. This type of mortgage has proved helpful for many military families. Not only do they require no money down, but you only need a credit score of 620 or higher to be approved.
7. Start rebuilding your credit
During the process of tackling your debt and preparing for your home purchase, there are a few things you can do to speed things along with rebuilding your credit. For example, make sure you are paying all of your bills on time. Once you get your credit card balances nice and low, keep them that way. And avoid opening up any other credit card accounts; you may want to keep your existing accounts open, however, because it can prevent your credit utilization ratio from increasing.
A house purchase is a great way to invest in your present and future, and if you have substantial debt and/or bad credit, there are ways that you can start improving your situation today so that you can score a good mortgage in 12 months or less. Consider the tips listed here, and remember to stay dedicated and disciplined along the way—always keeping the end goal in mind!
Once you buy the home of your dreams, you may find you need help with repairs or renovations that you can’t tackle yourself. Look to the experts at May Custom Home to help you with all your home improvement needs. May Custom Home is your one-stop-shop for home improvement in Tampa!