How long does it take to get my credit ready to buy a home?

Purchasing a home is a huge decision one makes in their life, and a significant factor in the home-buying process is having your credit approved. But do you know how long it takes to get your credit ready to buy a home? If not, this blog post is for you. We’ll explore the process of getting your credit in order and what steps are needed before buying that first home.

Your credit score and home buying

When buying a home, it is crucial to understand your credit rating or score. This rating measures how often you pay bills on time and whether or not you have left debts unpaid. A high score can help you get a lower interest rate for purchasing a mortgage, while a low score can make it challenging to get approved for a mortgage. The credit rating ranges from 300 to 850—300 being the lowest rating and 850 being the highest rating. Your credit score gets calculated using payment history, total balances, and outstanding debts, amongst other factors. The higher your credit rating, the more simplified buying a home becomes. 
The minimum score to buy a house or get a loan is usually in the range of 600-680, while the average credit score is usually around 750. When you apply for a mortgage, lenders will access your FICO score, and if it falls below 680, you may face tough negotiations with the lender when deciding on your interest rate and payment options. The lower your score, the higher interest rates go when you are buying a home. For example, if you have poor credit, you might only qualify for an interest rate of 5% compared to someone who has excellent credit and can be eligible for an interest rate as low as 3%

Managing your credit 

Many people are interested in buying a house, but many get held back because they don’t know how to manage their credit. However, it is possible to improve your credit score. Once you do so, you will have better odds when applying for mortgages. 
If you’re looking to keep a good handle on your credit rating, consider that two main factors affect your score. Your payment history accounts for 35% of the total score, while the debt owed accounts for 30%. By managing these two items, you can improve your chances of buying a home. The following tips can help you manage your credit when purchasing a home.

• Make consistent payments on time – Late or missed payments can highly impact your score. Not only that, payments should be timely enough such that lenders will see that you’re reliable and trustworthy when looking to buy a home.
• Don’t go over the credit limit – While it may be enticing to spend more than your means, it’ll eventually add up and hurt your score in time. It is suggested to try and keep 30% of your credit available.
• Avoid closing out accounts – Having a long credit history gives lenders an indication that you’re trustworthy when borrowing large amounts of money, such as mortgages. Closing out accounts with history will reduce this length and give the impression that you’re not as dependable.
• Don’t carry balances – Credit utilization is one of the most significant factors in calculating your score, so avoid carrying large balances on new credit cards. Instead, pay off new charges immediately or wait until they’ve had reports to major bureaus before leaving them unpaid, even if it’s for only a day.
• Keep up on all bills – You want to keep your account information current with creditors because any lags between billing cycles could harm you by giving lenders an inaccurate reflection of how indebted you are. 

Managing your credit properly can mean the difference between getting approved for a mortgage and being turned down.

How long does this all take?

“How long does it take to manage your credit?” is a question many people have answered differently. For whatever reason, be it improving their credit score or just simply managing the current credit that they have, people have found different answers to this question, and there is not a one-size-fits-all solution.
The average time it can take to get ready to buy a home is anywhere between three and six months. The process of getting prepared involves:

• Clear up errors on your credit report.
• Pay off bills you owe.
• Have savings in your emergency fund and save enough money for the down payment.

It also includes saving for other expenses with owning a home, such as maintenance costs, household improvements, and different unforeseen needs. 
It’s best to be financially stable when trying to secure financing because lenders want financially stable borrowers to afford the monthly payments and pay off their loans on time. While it could take 3-6 months to prepare for buying a home, there is time spent waiting on lenders. Being approved for a mortgage usually takes two or three months before knowing if you qualify because lenders must take steps to ensure that the financial institution doesn’t take on too much risk with who they are loaning money to. 
After approval, it can take about one month for your lender to order an appraisal of the property after receiving your application, credit report, and all supporting documentation needed. After putting together a file on you as a potential borrower, they will send out someone for an appraisal to do an in-depth look at the property you are interested in. This process includes details about your employment history, income level, and debt obligations. The appraisal is then used to determine if there is enough equity to cover the costs of buying this house and shutting down any existing mortgages on it. 
It generally takes three weeks for your credit score to come back after receiving one preliminary report from an independent party hired out by your lender. If everything looks good, they’ll take another week or so to process everything needed for pre-approval. However, if any additional information is required on your credit report, this time could stretch into four or five weeks. Once these steps are completed and confirmed that you have sufficient income, you can look at houses with a real estate agent. The entire time from pre-approval through the offer process usually runs 6 – 8 weeks, but it can take much longer because of the other reviews banks are doing.
One of the most critical steps in buying a home is getting your credit ready to buy; Movoto is prepared to help. The time it takes to get your credit ready for a home purchase depends on the state in which you live. It can take months to years to buy a home, but that doesn’t mean there are no options available. Movoto will make sure that all aspects of purchasing a new house are easy and efficient, so you don’t need to worry during this exciting time. This can be done by following these tips for improving your credit score, checking your credit report, and finding out if you have any errors on it, or by working with Movoto’s team of real estate experts.