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How to's and money-saving tips from resident homeowner and mortgage professional, Cathy West

Good credit scores are crucial to getting low mortgage rates

Across the country, millions of young adults are now considering the benefits of buying their own homes instead of continuing to rent. However, some might not be as prepared to do so as they may think, and as a consequence, could be in a position to stumble out of the gate.

One of the most important things consumers can do ahead of applying for a mortgage is build a strong credit rating. This is important – especially these days – for two simple reasons. First and foremost, lenders still have their home loan standards quite high, meaning that those with low or even middling credit scores are likely to have their mortgage applications rejected on the grounds that lenders view them as too great a risk. Second, though, is the fact that once people start being able to qualify for a home loan, better scores mean lower mortgage rates for the life of the loan. And that can help them to save as much as tens of thousands of dollars over the next few decades.

Qualifying is key
Of course, getting to the point where they can even get approval on a mortgage from the financial institution of their choice is obviously the first hurdle to clear, so knowing how far they have to go is critical. That means that before they take any other steps, it's probably wise for them to check their scores and make sure they're even in the neighborhood of what lenders currently consider to be a reasonable score (usually at least 700). If they're short of that mark, figuring out why – such as having too much credit card debt or missed payments in their recent histories – can be key to smoothing over their problems.

Usually, getting credit back on track can be as simple as making on-time payments on every account for six months or so, and also reducing the amount of debt being carried by making larger monthly payments. For many would-be buyers, this isn't going to be easy, but it will be necessary to build a better score and improve chances to even qualify for credit.

What's next?
Once they can qualify for credit, the obvious next step is to get a score as strong as possible, and the same principles apply here. Demonstrating the continued ability to keep up with every payment every month, and also paying down debt. The best thing that can be done in these cases is to keep outstanding balances down to less than 30 percent of total credit limits; anything above that is when a score starts to be damaged.

In general, lenders just want to see consumers exhibit the ability to carefully maintain their various accounts and make sure they're never falling behind. If they can do that successfully, qualifying for a mortgage at today's high affordability won't be that difficult.

To receive a free quote, simply visit www.capwestmortgage.com/quote or call (866) 614-5959 to speak with a CapWest Mortgage representative today.

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