Ever wonder how your credit score is calculated? There are several factors involved in determining your credit score. Learn more now.Banks use your credit score (aka FICO score) to help determine whether you are a worthy risk for a Hendersonville home loan. It’s also one of the deciding factors regarding your interest rate on a mortgage loan. Most likely, you already know WHAT a credit score is. But have you ever asked yourself, “how is my credit score calculated?” That’s a much more complicated answer.

Lenders like it when you have several different types of credit. That includes not only revolving credit, like credit cards and department store accounts, but also previous mortgage notes on other Hendersonville area homes, installment loans, student loans, car loans, etc.

Most Hendersonville home owners have debt. It can sometimes be unavoidable. But, too much debt makes you look risky. Make a concerted effort to pay down as much debt as you can before you apply for a mortgage loan.

Banks live by the mantra “those who cannot remember the past are condemned to repeat it.” Your payment history says a lot about your creditworthiness. Late payments on any bill, including the cable, cell phone, electric bill, etc., may be reported to the credit reporting agencies, reducing your score and your chances of scoring a home loan.

Not only is your payment history important, but the length of time you have had credit can affect your score as well. The longer you’ve had a history of credit accounts and payments, the more complete a picture a mortgage company will have at your spending and repayment habits. A long history of credit with faithful payments makes your Hendersonville home loan a much more attractive risk than someone who just received a credit card two months ago and is applying for a home loan.

Finally, opening new credit while trying to purchase a Hendersonville home is a definite “no-no”. First of all, your credit is hit by 5-10 points every time someone makes an inquiry. When you purchase a car, for example, the dealership may try to find you the best deal by shopping around at a few lending institutions. That could mean three to four different hits on your credit at one time. Secondly, a mortgage company could look at this as someone who is set on a spending spree, which makes you look less fiscally responsible and can cost you approval on your home loan.

Knowing how your credit score is calculated can help you stay on top of your credit in a more effective manner. Keep these tips in mind before you apply for a mortgage on your Hendersonville home. A good score not only means loan approval, but can also determine how much it will cost you for any loan you take out.

Rich Cooke, your Western North Carolina real estate specialist

Originally posted on my Western North Carolina Real Estate blog here: http://rich-cooke.com/2012/09/13/calculating-credit-score/.

Be Prepared When Buying a HomeCongratulations!  Whether you’re a first time homebuyer or someone who’s been around the block a few times, purchasing a Western North Carolina home is a big investment in both time and money.  It’s important to be prepared when buying a home.  Here are a few things you can do to make the home buying process smoother:

Make a List – Write down everything you absolutely cannot live without.  How many bedrooms does your Hendersonville home need?  Will a two-car garage work or do you need three spaces?  Does your home need to be close to work?  What size dwelling (in square feet) do you want to own?  By putting these needs down in writing, you will be able to better focus on the homes you really want without being distracted.

Hire a ProfessionalFinding the right Western North Carolina REALTOR® to help you with all your home buying needs is key.  You need someone who is experienced and can make you feel comfortable.  They also have access to listings that you can’t find anywhere else, including online real estate websites like Trulia or Zillow.  Since they are in the field everyday, they can use their extensive network to help you find the perfect Henderson County home.

Do Your Research – Once you’ve decided on which neighborhood you’re truly interested in settling down in, do research on the area.  Drive around the community on different days and at different times to get a feel for the place.  Find out what the local economy is like.  Research prices of homes in the area so you know what is reasonable and what isn’t.  Check out the school district.  Even if you don’t currently have children, the school system can be a big selling point when it comes time to sell your Henderson County home.

Get Pre-Approved – Unlike pre-qualifying, which only tells you how much you should be able to afford based on a quick analysis of your debt-to-income ratio and credit rating, being pre-approved for a Hendersonville home means that you have already gone through the loan qualifying process and a mortgage company has given you a letter of credit stating that you are approved for X amount of dollars.  When you find that perfect home you absolutely must have, this letter of credit will show the seller that you are both serious and ready to act now.  They won’t have to wait through the lengthy loan qualifying process to see if you even get approved.  You’ve done the work already.  You may even be able to negotiate a better price because of this (talk to your REALTOR® about this).

Whatever you can do to be prepared when buying a home will ultimately help your Western North Carolina real estate transaction happen as smoothly and successfully as possible.  Feel free to contact me with any questions.  I’m always happy to help.

Rich Cooke, your Western North Carolina real estate specialist