Tips for Removing Credit and Money Management Barriers to Homeownership

(Corpus Christi, TX) For the average American household, using credit is a part of every day life. But how they use it can affect their quality of life. Wise use of credit helps make the dream of homeownership a reality by helping consumers qualify for the most affordable mortgages available. However, unresolved credit problems remain a major barrier to many families who want a home of their own.

Consumer Credit Counseling Service (CCCS) of South Texas helps consumers move closer to this dream by teaching them how to manage money wisely and by educating them on the importance of credit in the home buying process. By showing consumers how to reduce overwhelming debt and regain control of their finances, CCCS helps them improve their credit standing, which lays a solid foundation for obtaining a home.

"Buying a house doesn't happen overnight. Unfortunately, many consumers who want to buy spent about that much time making their decision, then are disappointed when issues like credit problems and down payment costs come up," said Lori Pridgen of CCCS. "Many simply give up on their dream of homeownership. This doesn't have to happen - there is hope," added Pridgen, director of community relations.

Future homeowners should consider the following tips from CCCS:

Establish a good payment history. Pay all bills on time for at least one year, preferably two, to qualify for a mortgage. Late payments of any bills, whether small or utility bills, can disqualify you from some loan programs and increase the interest rate on others. Lower your debt load. Lenders compare the amount of your debt to your income (debt-to-income ratio) to determine the amount of money you can borrow for a loan. Excessive debt will reduce your buying power.

Build a savings account. There are a lot of up front costs associated with buying a home. A down payment of 3-10 percent is usually required, depending on type of mortgage loan. Closing costs and any moving/settling-in costs must also be considered. It is better to overestimate these expenses than to underestimate them.

Consider attending a homebuyer education seminar. Understanding the home buying process can make purchasing a home less stressful. Learning about all the costs and steps involved could save you time and money. CCCS offers these classes several times a year.

Check your credit report and verify its accuracy. Obtain copies of your credit reports before you attempt to qualify for a mortgage if you suspect any credit problems. Then get copies of your credit report from each of the three major credit bureaus at least once a year to monitor errors or fraud.

Seek help. Trying to solve your financial problems alone can be overwhelming, but help is available. CCCS has certified counselors who will examine ways to solve current financial problems. They can negotiate with creditors, help lower your debt, and develop a spending plan that covers both your living expenses and payments to your creditors.

Good money management skills and smart credit use are important in qualifying for a mortgage loan, and in protecting their investment later. "Homeownership comes with a hefty price tag for repairs, upkeep, taxes and insurance. Consumers must constantly monitor these costs and their spending to keep their credit and savings in tact," Pridgen warned.