Home Ownership Program

Thinking about buying a home? We have information that can help! Got questions? Talk to one of our credit counselors!

Home ownership is likely one of the largest purchases of your lifetime. Learn more about credit, financing and the purchasing of your home.

Owning a home is a big part of the American Dream. Here at NCR Credit Repair, we offer some resources that can help you buy your home, and keep your home.

NCR Home Ownership Program

Credit Score:

If you have a good credit score, you’ll almost always qualify for the best interest rates, and you’ll pay lower finance charges on credit card balances and loans. The less you pay in interest, the sooner you’ll pay off the debt, and the more money you’ll have for other expenses.

1. You’ll have an easier time purchasing your own home.

According to Experian, a credit score of 620 is often the minimum credit score you need to qualify for an home. This falls into the “fair credit” range for both FICO and VantageScore’s rating scales (at 580 to 669 and 601 to 660, respectively).

But if your credit score is 700 or above, it’s more likely that your loan application process will be easier since your good score can help you stand out to potential lenders.

2. You’ll get the best rates on car and homeowners insurance
According to McClary, having a good credit score can help you save money on your car and/or homeowners insurance.

Most U.S. states allow credit-based insurance scoring, where insurance companies assess your risk based on how well you handle your money.

A variety of other factors go into evaluating your rates, and insurance companies don’t rely solely on your credit score in the underwriting process. They cannot penalize you for a bad score by raising premiums, denying coverage or canceling your policy.

But according to the insurance company Nationwide, credit-based scoring results in the most fair assessment of a driver’s risk and the company reports that it actually lowers premiums for about half of its customers.

(Note: Credit-based auto insurance scoring has been banned in Hawaii, while credit-based home insurance scoring has been banned in Maryland. The practice has been banned entirely in Massachusetts and California.)

3. It’s cheaper to borrow money
If you ever want to get an auto loan, remodel your house or open a business, having a good credit score will qualify you for lower interest on nearly every kind of personal loan you might need.

“A high credit score means that you will most likely qualify for the lowest interest rates and fees for new loans and lines of credit,” McClary says.

And if you’re applying for a mortgage, you could save upwards of 1% in interest. This could mean saving at least $200 per month over the lifetime of a 30-year mortgage on a $300,000 house.

4. You’ll be better prepared for the future
When you have a good credit score, you’re more likely to meet lending approval guidelines and borrow money when you need it most.

This can help if you’re ever in a pinch and need to open a credit card. You’re more likely to qualify for a 0% APR card like the Citi Simplicity® Card. During a life-changing transition, such as a move or home remodel, you can take advantage of 0% intro APR for 21 months on balance transfers from the date of first transfer and 0% intro APR for 12 months on purchases from the date of account opening (then 14.99% to 24.99% variable APR; balance transfers must be completed within 4 months of account opening).

5. You can access perks and enjoy the best rewards

It’s no secret that the best rewards credit cards require at least good credit. And McClary says there are other perks, as well.

With a good credit score, “you can also take full advantage of the best introductory offers and reward incentives on new credit cards,” says McClary. “Some higher tier credit cardholders are able to receive special invitations to exclusive events, free access to online streaming services and even free swag.”

One of Select’s best credit cards for sports fans, restaurant lovers, movie buffs and adventure seekers is the American Express® Gold Card. Cardholders can earn 4X Membership Rewards® points on restaurants (including takeout and delivery, plus, Uber Eats purchases) and at U.S. supermarkets (on up to $25,000 per calendar year in purchases, then 1X), 3X points on flights booked directly with airlines or on amextravel.com, 1X points on all other purchases (terms apply).

6. You’ll develop a good reputation

A person with a good credit score doesn’t have to look far for offers in fact, the offers come to you when your credit score shows you’re a trustworthy borrower. This comes in handy when you want to refinance existing debt, take out a personal loan or upgrade to a better credit card with your current issuer.

And beyond credit products, good credit habits follow you into the workplace. In the states that allow it, employers often pull consumer credit reports to make decisions about who to hire, promote and reassign — particularly if the job comes with the responsibility of making top-level financial decisions.

There are limitations as to what your employer can see under the Fair Credit Reporting Act, and they won’t see your exact credit score. But with your signed permission, employers can legally access your credit report and see information like your open lines of credit (such as mortgages), any outstanding balances, your total amount of auto or student loans, past foreclosures, late or missed payments, your bankruptcies (if any) and balances that have gone to collections.

So while employers can’t see your actual score, they will see most of the information that comprises your score.

The most important habit for achieving a good credit score

If you want to build credit and improve your score so you can experience the benefits of good credit for yourself, the most important habit is simple pay your bills on time.

“A history of timely payments is the single biggest factor in determining your credit score according to FICO. “Bringing past-due accounts up-to-date and keeping them there should be a priority for anyone who has been struggling because of delinquent accounts.”

Bottom line

Nearly every facet of your financial life is impacted by the strength of your credit score, from loan and mortgage applications, and even something as essential as a lease on a new apartment. A good credit score can also qualify you for the best introductory offers and rewards credit cards with VIP perks like concert ticket presales, exclusive events and even, in some cases, luxury concierge service (read more about the Black Card’s elite rewards).

About our Home Ownership Program

Qualifying for a mortgage with a Bad credit scores

The good news is that NEW home buyers can qualify for a home loan with a below agerage credit score.

In fact, there are several loan programs specifically tailored to help people with lower credit scores.

But this doesn’t mean everyone with a low score can qualify for a mortgage.

You’ll have to meet other standards set by lenders, too.

Lenders must verify your income and confirm your ability to afford a mortgage payment
Typically, you must be employed for at least two consecutive years to qualify for a home loan. (Although there are some exceptions to the two-year job history rule)

Your credit history must be good, too. This means no late payments or negative information reported to the credit bureaus within the past 12 months. Your existing debt-to-income ratio can’t be too high. Our Home Ownership Program will address all these issues and concerns.

To qualify for most mortgages, your total debts including the home loan, typically need to be under 45% of your pre-tax income

Your debt-to-income ratio (DTI) is your monthly debt obligations as a percentage of your gross monthly income.

For example, if you make $3,000 a month before taxes, and you have $500 worth of monthly debt repayments, your DTI is 17%. Debts that count toward your DTI include things like minimum credit card payments, auto loans, student loans, and so on.

If you meet these other criteria, a credit score in the 600 range shouldn’t stop you from homeownership.

You just have to choose the right mortgage loan program.

What is a rapid rescore, and how does it work?

A rapid rescore is a way to raise your credit score quickly to help you get approved or qualify for better rates and terms during the mortgage application process.

Maybe you’ve updated some important financial information already, but the changes haven’t been reflected on your credit report yet. Or perhaps you want to pay down enough debt to qualify for a lower rate.

Your mortgage lender can help you look at your credit history with a rapid rescore simulator. It allows you to figure out hypothetically what actions could get your credit score to where it needs to be. Then you take those actions.

Since positive movement generally takes several weeks to appear on your credit report, you get a rapid rescore done. Those new items will quickly show up on your credit history (and ideally, give you a new credit score as well).

Rapid rescoring is usually a successful strategy. However, it can fail to produce the results you and your lender expect. It can even backfire. In some cases, your credit score may drop. But, that only happens if you’ve unknowingly taken actions that hurt your credit score before you request a rapid rescore.

In most cases, if your lender is experienced with rapid rescoring, this shouldn’t be a problem. However, make sure you discuss the details with your lender before using a rapid rescore.

What items can be addressed with rapid rescoring?
The easiest and possibly most successful item you can have updated through rapid rescoring is paying down a loan or credit card balance. Your amounts owed account for 30% of your credit score. So, if you have lingering debt, it might behoove you to pay it off. This will help to lower your credit utilization ratio.

Plus, on top of your credit score, mortgage lenders also look at your debt-to-income (DTI) ratio. Your DTI ratio is how much in minimum debt payments you owe each month compared to how much pre-tax income you bring in.

If it’s over 43%, you might have trouble qualifying for a home loan. Your lender can use the rapid rescore simulator to give you a suggestion of how much debt to pay off to either raise your credit score or lower your DTI. Then, you can do a rapid rescore so that the information is quickly updated on your credit report.

Even if you regularly pay off your credit card balances, it might not reflect a zero balance in your credit score. This is because whatever your credit card balance was on the day they pulled your credit report, that is the amount of debt that will be factored into your loan application.

Plus, remember that most information has at least a 30-day delay. So, unless you’ve stopped using your credit cards well in advance of applying for a loan, you’re likely to see credit card balances that may not be up-to-date.

Need Help?

1. Figure out how much you can afford

What you can afford depends on your income, credit rating, current monthly expenses, downpayment and the interest rate.
Home Economics
Homebuying programs in your state

2. Know your rights
Fair Housing: Equal Opportunity for All – brochure
Real Estate Settlement Procedures Act (RESPA)
Borrower’s rights
Predatory lending
3. Shop for a loan

4. Learn about homebuying programs
Homebuying programs in your state

5. Shop for a home
Wish list – what features do you want?
Home-shopping checklist?
Fixer-Uppers – home purchase and repair programs
Manufactured (mobile) homes
Shopping for a Home FAQ’s
6. Make an offer
Making an offer
7. Get a home inspection
For Your Protection Get a Home Inspection
8. Shop for homeowners insurance
Homeowners insurance
What is homeowners insurance and why is it important?
9. Sign papers You’re finally ready to go to “settlement” or “closing.” Be sure to read everything before you sign!
Getting ready to close

The benefits of purchasing and owning your place of residence are both financial and emotional – pride in homeownership and the feeling of security are huge intangible benefits.
An obvious financial benefit of homeownership is the appreciation of your home over time. Housing markets do move in cycles, but houses will almost always appreciate to some degree over time.
Other benefits include property tax deductions, capital gains exclusion, and other preferential tax treatment.

The community benefits of homeownership can take many forms. It has often been found that owners are more likely to upkeep their homes and yards, raising property values and impressions of neighborhoods and communities. Living in one place for a longer amount of time creates and obvious sense of community pride, which may lead to more investment in said community.

Families also benefit from homeownership, with studies proving that parents are able to spend less time in a stressed state, therefore spending more time with their children. The ability for parents to feel stable has a huge impact on children’s behavioral issues, educational success, and future economic success.

The financial benefit of homeownership is undeniable, and certainly the easiest benefit to demonstrate. On national level, homebuyers who purchased a home 10 years ago have gained an average of $225,000 in equity if their home sold for the average price.

What credit score do you need to be a homeowner? 620
Generally speaking, you’ll need a credit score of at least 620 in order to secure a loan to buy a house. That’s the minimum credit score requirement most lenders have for a conventional loan. With that said, it’s still possible to get a loan with a lower credit score, including a score in the 500s.Jan 13, 2022
Also keeping balances low on your credit cards. A common rule of thumb is to keep the balance at or below 30 percent on each line of credit to improve your credit score.

What is a good credit score to buy a house 2022?
Prospective home buyers should aim to have credit scores of 760 or greater to qualify for the best interest rates on mortgages. However, the minimum credit score requirements vary based on the type of loan you take out and who insures the loan.

What credit score is needed to buy a house 350k?
You don’t need flawless credit to get a mortgage. But because credit scores estimate the risk that you won’t repay the loan, lenders will reward a higher score with more choices and lower interest rates. For most loan types, the credit score needed to buy a house is at least 620.

Because of changes in legislation, lending requirements and related issues, FHA regulations and underwriting requirements are subject to change from time to time. Some of the changes come as part of new laws that close legal loopholes, improve the fairness of the FHA mortgage loan process, or modernize the FHA loan program. Other alterations are made in response to current market conditions and economic issues.

Because of the changing nature of the FHA home loan program, the information new house hunters may have gathered a year or two ago when considering a new home may not be the same if they chose to wait to start the loan application process.

This is definitely the case for any potential borrower who investigated their FHA loan options recently. FHA issued new guidance in the last several years on the minimum credit scores needed for certain FHA guaranteed home loans.

Minimum credit score requirements for FHA home loans depend on which FHA loan product the applicant needs. Generally speaking, to get maximum financing on typical new home purchases, applicants should have a credit score of 580 or better. Those with credit scores between 500 and 579 are, according the FHA guidelines, “limited to 90 percent LTV”.

Applicants who have a minimum decision credit score of less than 500 are not eligible for FHA mortgages. Those with credit scores of 500 or better are eligible for 100% FHA loan financing with no down payment required when using the FHA 203(h), Mortgage Insurance for Disaster Victims.

The FHA does make allowances for loan applicants with a “non-traditional credit history or insufficient credit” may be able to be approved for an FHA loan if they meet FHA requirements for such circumstances.

The minimum credit scores listed here are in effect for most FHA home loans for single family residences with a few exceptions which include (but are not limited to) Title 1 HECM loans and HOPE For Homeowners loans. Always ask an FHA loan expert or your local FHA lender about your credit score and what you qualify for.

Don’t assume you cannot be approved for an FHA insured home loan do you have changes in your credit score since the last time the credit reports were run? You may have options that can improve a poor credit score over time. Some potential borrowers may need to spend a year or so repairing bad credit and establishing a reliable payment history.

Those with past credit problems can often improve their scores over time and become eligible even under the new updated FHA minimum credit score requirements. The first step is to request help from the FHA for credit counseling or first time homebuyer counseling. Help is available at FHA.gov.