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Saturday, March 16, 2013

When buying a home understand your debt, understand your credit

Ask most people how much money they owe and they will probably have an answer.  How close the number is to the actual debt owed will vary greatly.

The same goes for the question about one's credit score.  They may not know the score but the credit is almost always "good."

The first step in the home purchase process is understanding the financial realities.

First there is a difference between home buying and home borrowing.

Your debt load (debt to income ratio) and credit score will likely have the greatest influence on your ability to borrow to purchase a home.
  • debt-to-income ratio - percentage of your income that goes toward paying your debt calculated by dividing your monthly debt spending by monthly income and multiplying by 100. 
  • credit score - a numerical rating of creditworthiness derived by information in one's credit report. Although several number systems exist this number gives a real snapshot of risk. 
Credit reports are not always correct.  Do not wait until you are ready to apply for a loan to find out there are incorrect entries. With identify fraud much more prevalent today it is imperative you guard your information as well as monitor your credit.

Every twelve months you are entitled to receive free credit reports for your review.  Here is the link to

When you are ready to buy a house or condo in Brevard County, Florida, give me a call at 321-693-3850 or email if I can help in any way.

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