Post-Holiday FHA Loan Tips for House Hunters
What do you need to know about holiday spending vs. your mortgage plans? We examine important issues below.
Avoid Missed Payments
Remember that the definition of a missed payment (as opposed to a late payment) may vary from creditor to creditor. Make sure you know the due dates and arrange to make some kind of payment rather than missing the deadline which can hurt your FICO scores.
Pay With Cash
Paying with cash and not using your credit cards over the holiday season is a no-brainer for those who want to buy a home in 2024. But the inverse can also help.
Did you put too much on your credit cards in December? Temporarily retire those cards going forward in favor of paying with cash to avoid treading water on your credit card balances. While you are doing this, don’t apply for any new credit ahead of your mortgage loan application.
Work With Your Creditors
Did you overextend yourself over the holiday season and are now feeling the pinch? Contact your credit card companies to learn what you can do to offset a post-holiday financial crunch.
You may find that working with your creditors and making a plan with them goes a lot farther where your FICO scores are concerned than ignoring the problem until next month, which is what we are all tempted to do from time to time.
If You Do Miss a Payment
FHA loan rules for loan approval typically include the need to put 12 months between you and your last late or missed payment. Time your application for an FHA loan to make sure you are over that 12 month limit for best results.
It’s not that your lender will reject your loan application out of hand for a single late bill payment, but you may be offered a more expensive loan if you don’t respect the 12 month rule.
Don’t assume that one or two lenders turning you down for a past credit issue represent the entire market. Borrowers typically do better when they shop around for a lender, especially with less-than-perfect credit. You don’t have to have an 800 FICO score to get an FHA loan but you will need a participating lender willing to work with you and your circumstances.
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