Buying a home is one the biggest financial decisions you’ll make in your lifetime. And it’s an empowering one! Having a space of your own to make memories in is a beautiful achievement. For those who may not know my story, I was a young single mom, working multiple jobs, struggling to make ends meet. Things were difficult, to say the very least. I didn’t know anything about credit back then, but noticed how it affected my ability to buy a home. I wanted to provide the best life possible for my daughter. It broke my heart when she asked to paint her room pink and I had to tell her no because repainting wasn’t allowed in our rental agreement. That’s when I realized credit was the real key to unlocking a dream home and a future filled with opportunities.
Ever since, I became fiercely committed to improving my credit score, and once I cracked the code, I wanted to share that knowledge of a brighter future with others who were living in the dark for far too long like I was. 25 years later, and I’m still just as passionate about the credit game as I was when I first started it, because I believe in its power and have seen the remarkable wins my clients have received as a result.
I recently had one of my good friends and a masterful mortgage broker, Denise Panza, join me on the podcast to talk all about the homeownership process. With our combined experiences and expertise, we shared our top tips for getting started. Take a peek below!
- Credit First, House Hunting Second
Your credit score is the primary factor lenders will consider when determining the type of mortgage loan you’re eligible for. If you’re an entrepreneur like me, you’ll be relieved to know there are plenty of options out there for you too! But whether you’re a business owner or working a traditional 9-5, stellar credit is still the key to your dream home. The higher your score, the better your chances of approval and securing a low-interest rate, which can save you thousands over the lifespan of the loan.
Here are some ways to improve your credit:
- Check your report: In 25 years, I’ve yet to see a report that didn’t have a mistake on it. Regular reviews are important for catching these mistakes early and disputing them with credit bureaus as needed. You can receive a free credit snapshot here.
- Pay down high-interest debt: Reducing your credit balance below 10% of your available credit limit can boost your score.
- Avoid late payments: Auto payments are a fantastic option to avoid missing bills altogether. However, be careful. Sometimes even these payments can be inaccurate or glitch, causing a dent in your credit. Always keep tabs on what’s going out to ensure there are no hiccups.
- Get Pre-Approved Early
I know you’re excited to get to the good stuff — house hunting! But before you begin, you need to get pre-approved for a mortgage. This is different from being pre-qualified, which is simply a quick estimate based on your self-reported financial status. A pre-approval, on the other hand, is an official detailed document from a lender that outlines how much you’re eligible to borrow based on your credit, income, debt, and assets.
Here’s why pre-approval is so important (and takes the cake for Densie’s top tip for homebuyers):
- Budget Clarity: A pre-approval helps to guide your search by stating your ideal price range, which helps to prevent wasting valuable time (or getting your heart set) on houses outside your budget.
- Negotiating Power: Sellers are more likely to take your offer seriously when armed with a pre-approval letter. This shows you’re prepared to make an offer.
- Seamless Purchase: With a pre-approval in place, the actual loan approval process will be faster and more efficient once you’ve found that home that makes your heart flutter.
Final Thoughts
Recently Densie and I had the privilege of facilitating a first-time homeownership experience for a family of five. While they were comfortable, they knew they wanted more for their growing family than to be crammed in a rental property. At the start of our work together, their credit status wasn’t hitting the sweet spot. We made a plan, mapped out progress points, and before we knew it they were mortgageable.
The parents didn’t let their children in on the secret, for they wanted it to be a surprise. Denise and I were in tears watching a video they sent over of their youngest son opening a box from the realtor. As he opened it, his eyes grew wide when he saw a key. He realized what it was and the excitement that exuded across his face was palpable! The whole family quickly joined in on the celebratory milestone of finally having a space to truly call home.
So let this heart-warming story remind you that your homeownership dreams can happen, no matter where you are now! It takes diligence and hard work to see it through, but once you’re in, there’s no going back and you’ll be so happy you never gave up!
Denise and I are in your corner and here to help open any door that may have closed by providing practical advice and encouragement to confidently take this next step. Get in touch today and let’s do this!
Connect with Denise: @denise_panza
Connect with Jeanne: @creditjeanne
Listen to the full episode:Denise Panza talks First Steps of Home Buying with Jeanne Kelly on Credit Over Coffee
