Linda D. Dempsey - KELLER WILLIAMS REALTY


It’s hard to overstate the importance of credit scores when it comes to buying a home. Along with your down payment, your credit score is a deciding factor of getting approved and securing a low interest rate.

Credit can be complicated. And, if you want to buy a home in the near future, it can seem daunting to try and increase your score while saving for a down payment.

However, it is possible to significantly increase your score in the months leading up to applying for a loan.

In today’s post, we’re going to talk about some ways to give your credit score a quick boost so that you can secure the best rate on your mortgage.

Should I focus on increasing my score or save for a down payment?

If you’re planning on buying a home, you might be faced with a difficult decision: to pay off old debt or to save a larger down payment.

As a general rule, it’s better to pay off smaller loans and debt before taking out larger loans. If you have multiple loans that you’re paying off that are around the same balance, focus on whichever one has the highest interest rate.

If you have low-interest loans that you can easily afford to continue paying while you save, then it’s often worth saving more for a down payment.

Remember that if you are able to save up 20% of your mortgage, you’ll be able to avoid paying PMI (private mortgage insurance). This will save you quite a bit over the span of your loan.

Starting with no credit

If you’ve avoided loans and credit cards thus far in your life but want to save for a home, you might run into the issue of not having a credit history.

To confront this issue, it’s often a good idea to open a credit card that has good rewards and use it for your everyday expenses like groceries. Then, set up the card to auto-pay the balance in full each month to avoid paying interest.

This method allows you to save money (you’d have to buy groceries and gas anyway) while building credit.

Correct credit report errors

Each of the main credit bureaus will have a slightly different method for calculating your credit score. Their information can also vary.

Each year, you’re entitled to one free report from each of the main bureaus. Take advantage of these free reports. They’re different from free credit checks that you can get from websites like Credit Karma because they’re much more detailed.

Go through the report line by line and make sure there aren’t any accounts you don’t recognize. It is not uncommon for people to find out that a scammer or even a family member has taken out a line of credit in their name.

Avoid opening several new accounts

Our final tip for boosting your credit score is to avoid opening up multiple accounts in the 6 months leading up to your mortgage application.


Opening multiple accounts is a red flag to lenders. It can show that you might be in a time of financial hardship and can temporarily lower your score.


Deciding to pay off your mortgage can be a confusing decision to make. You might be wondering about how you would take care of other financial debts or emergencies should they arise. Deciding to pay or not to pay off your mortgage early should be a decision made by you. The economic circumstances around you should determine this decision at the time.

It is tempting to continue paying for a mortgage in bits because of the benefits homeowners enjoy. As a homeowner though, there are situations when you find yourself considering the ‘paying down' option. Before you make such a financial decision though, you should speak to your financial advisor and be certain it's the best decision to make. 

Pay off your mortgage early under any of these circumstances listed below:

Before retirement

So many people plan for retirement—it's a period when you want to be as comfortable as possible. Taking steps and putting things in place before you retire is one of the best financial decisions anyone can make. While making your retirement plan, it's advisable you consider paying off on your mortgage. The reason behind this is as soon as you come into retirement, your steady monthly inflow reduces (most of the time). You may have more available time on your hands to go on vacation and treat yourself out. Having the thought of mortgage payments over your head at this period might be a burden. Pay off the mortgage before retirement and reduce what you must worry about when you retire. 

When you come into a significant amount of cash 

When you get a large cash amount, and you have settled all your bills and taken out some for investment, if you still have enough left, it's advisable to use it to pay off your mortgage. Using an inheritance or insurance payout against your mortgage is useful, you might not get another opportunity to pay down that mortgage. However, your mortgage may have early liquidation fees which you have to consider. Where there is none, there's a higher incentive to pay off part or all of it.

Possible increase in the interest rate 

The fear of an increased interest rate on an adjustable mortgage would make you consider paying off your mortgage especially if it's at a period when you can afford the money.

Low risk-tolerance

If you just happen to be the kind of person who is not risk inclined and would rather have one investment as opposed to having several investments that might yield more increase, it's better you pay off your home's mortgage as soon as you can.

Minimal tax benefit

A lot of the time people drag their feet as regards paying off the mortgage early because of the tax advantage they enjoy from having a mortgage. If your tax benefit is minimal or none — meaning you are not benefiting from a tax deduction for mortgage interest — it's advisable that you pay off your mortgage. 

Paying off your mortgage is a personal choice that involves you looking at your whole financial picture to determine if it will be a wise decision. Speak to your financial planner for more insight.


Who wouldn't like to pay off the mortgage early? Getting rid of mortgage debt will allow you the security and the psychological benefit of owning your home free and clear. There are lots of ways to accomplish these goals. Here are some suggestions on ways to get rid of your mortgage debt. Compare the options and do what works best for you. 1. Add more money to your monthly payment. This will help pay down the principal balance shortening the length of your loan. When you pay more on your principal is gets lower, and the lower your principal gets, the more every payment from then on is applied to principal, as less goes to cover interest expense. 2. Refinance. Refinance your mortgage to 10, 15 or 20 years. Your payments will be higher on a 15-year loan, but often the rate is lower and the loan is paid off much quicker. If you are afraid to take out a 15- year loan take out a 30-year loan, but make payments as if you had a 15-year loan. 3. Make biweekly payments. Most banks have a biweekly payment plan. Since there are 52 weeks in the year if you pay half your regular mortgage payment every other week, you'll have made 26 half-payments, or 13 payments. There are options when it comes to owning your home free and clear. Just decide which one works for you and be on your way to being mortgage free.

You might have seen the ads on TV about reverse mortgages, but what is a reverse mortgage? It is a loan for older homeowners that uses a portion of the home’s equity as collateral. Instead of the homeowner paying the lender, it is the lender that pays the homeowner based on the equity in the home. How much can be borrowed? The amount that can be borrowed in a reverse mortgage is determined by an Federal Housing Authority (FHA formula).  The formula considers age, the current interest rate, and the appraised value of the home. What are the requirements for a reverse mortgage? You must be at least age 62 The home must be owned free and clear or all existing liens. Any mortgage balance must be paid off with the proceeds of the reverse mortgage loan at the closing. There are usually no income or credit score requirements. How is the loan repaid? The loan cannot become due as long as at least one homeowner lives in the home as their primary residence and maintains the home in accordance with FHA requirements (keeping taxes and insurance current). The must be repaid when the last surviving homeowner permanently moves out of the property or passes away. The estate will have approximately 6 months to repay the balance of the reverse mortgage or sell the home to pay off the balance.  

Mortgage rates are at historic lows and there is no better time to buy a home. Do you qualify for those low advertised rates? Will you be able to secure a mortgage? Studies show that 6 in 10 people do qualify for mortgage loans. For those that can't qualify here are ten reasons why a would-be borrower might face rejection: 1. A low credit score will keep you from getting a mortgage. Typically, a score less than 620 is unacceptable by most lender standards. 2. A maxed out credit card threshold will stop a mortgage in its tracks. If your balance more than 30 percent of the allowable credit lenders will take pause. 3. Multiple credit inquiries may drop your credit score. Limit your credit inquiries to mortgage-only credit pulls within a 30-day period. 4. Did you Co-sign a loan with someone? If so, plan to provide 12 months of canceled checks showing they make the payments to the creditor. 5. Other housing liability payments or a consumer loan for a vehicle may prevent your loan approval. Lenders are looking for you to have double the income to offset each dollar of debt you carry. 6. If you are self-employed you may not be showing income under a Schedule C. This reduces your borrowing power. 7. Claiming many unreimbursed business expenses and losses on your taxes may help you pay less taxes but it also can reduce your borrowing power. 8. If you change jobs often this could also hurt your chances at a mortgage. If you occupational status has changed in the past two years it can hurt you. 9. If you are planning on using cash for your purchase think again. All monies must come from some kind of a bank account. 10. Don't plan on transferring money from different accounts during the loan process. Be prepared to show full bank statements and a chain of deposits etc. Your mortgage professional should be able to look at your credit, debt, income and assets and make a determination of whether you qualify for a mortgage.