You see, many lenders today have a useful credit tool that gives a detailed snapshot of a customer’s credit report. It emphasizes the positive and negative items affecting their credit score, and it can then suggest ways to improve on the score based on the amount of cash the customer may have available for such a purpose.

For example, if an individual has $5,000 of “disposable cash” available to use in an attempt to raise their score, the credit analyzer program can predict which actions can be taken to raise the credit rating – it is called a “What-If Simulator.”

This simulator will predict what will probably happen to your score if you were to pay down certain debts. You can simulate paying down one or more items, and you can also vary the amounts to find out what might affect your score best.

The What-If Simulator is a great experimental tool to see if your score can be raised enough to qualify for a first mortgage or to get a better interest rate. Keep this in mind and remember to ask if they use these tools, when shopping for a Lender or Mortgage Company.

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If you have been turned down for a loan because of your credit score recently, you are not alone. Lenders are requiring higher credit scores than in the past in order to qualify for a first mortgage. For instance, if you have a minimum credit score of 620 and can document your income, you may qualify for an FHA loan up to 97.5% of the property’s value. Anything below 620 and your chances of getting a loan dwindle – if you do get lucky enough to find a lender, you will probably have to jump through a number of hoops and come up with some deposit money. Everyone knows that to get the best mortgage deals today, you need to have top-notch credit. With this in mind, you should do everything possible to improve your credit score, if it is in that low 600 range.

Following are a few important things you should do to improve your credit score:

Always pay your bills on time. – This is the most important thing to remember. Late payments can adversely affect your score by up to as much as 100 points.

Pay down (but don’t pay off) credit card bills. It is important to pay down your credit cards, especially if you owe more than 50% of your credit limit. Common sense would tell you that paying off the debt entirely would be even better, but surprisingly it is not. Your goal should be to owe 30% or less.

If you do not have a credit card, or don’t show any credit, consider getting a secured credit card (if you cant get a “real credit card”) – this will help you to attain credit.

Car Loans, Student Loans and Mortgages – Treat these just as you do credit cards, pay them down as much as possible. While paying them off is good, paying them down will help your score more in the short term.

Dispute errors on your credit report – If you have a recent copy of your credit report and you notice some important errors, they should be reported to the credit bureau. For example, your ex-spouse’s account (their own and not a joint account) is showing up on your credit report, or there are late payments/collections showing that are not yours.

It is good practice to check your credit several times a year, in order to be aware of your score and to check for any fraudulent activity. Having the knowledge of your credit rating, and where it stands on the credit score scale, along with what is acceptable to lenders today, will only make life easier when you need to borrow money.

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If you plan on taking advantage of the homebuyer tax credit, whether you are a first-time homebuyer or a long-time homeowner, your time is running out. You must enter into a binding contract on or before April 30, 2010, or you will miss the opportunity to save some money.

If you haven’t already, check with an experienced Florida Mortgage banker for pre-qualification, so you know how much house you can realistically afford. In addition, here is a quick rundown of some rules you should be aware of, before taking the plunge:

- You must enter into a legal real estate contract to purchase a primary residence by April 30, 2010.

- The closing must take place by June 30, 2010.

- You have the option of claiming the credit on either the 2009 or 2010 tax return.

- Buyers must attach an executed Settlement Statement to their tax return.

- The home purchased cannot be more than $800,000.

- The homebuyer must be at least 18 years of age (for couples, one person must be 18).

- The homebuyer cannot receive a credit if being claimed as a dependent.

Members of the military and certain other federal employees serving outside the U.S. have an extra year to purchase their primary residence in the U.S. – making their deadline to enter in to a contract April 30, 2011 and to close by June 30, 2011. Check with the IRS or your Accountant for further details.

Not just for first-time homebuyers –

If you are a long-term homeowner, you are not left out of the new tax break either, but you also must follow some rules. You must have lived in your primary residence – the same home – for five years in a row during the eight year period that ended on the date you closed on your new home.

If you qualify, you may be able to claim a homebuyer credit of up to $6,000, or up to $3,250 if you are married filing separately. The new law that extended and expanded the November 6, 2009 law also raised the income limits for homes purchased after that November date. It phased out the credit for couples filing jointly who had a modified adjusted gross income of $225,000 to $245,000, as well as for individual filers with MAGI of $125,000 to $145,000. Note – The original credit phase-out of $150,000 to $170,000 for couples and $75,000 to $95,000 for individuals still apply for home purchases on or before that November 6, 2009 date.

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For those of you lucky enough to be in the market for a new home, whether as a first time homebuyer, or looking to upgrade to a larger home, your timing couldn’t be more perfect. Real estate values have plummeted to an unforeseen low – that is bad news for sellers, of course, but it is spectacular news for potential buyers, who have everything to gain by getting in while prices are low.

If you have good credit and your finances are in order, then you may not want to wait much longer to find your dream home. People who might be waiting for the market to hit the bottom thinking that home prices will still come down may be left holding the bag, as some areas have leveled off and have been at the same place for months, while others have already started to inch up in price a bit.

What is the best piece of advice for home buyers today? Do your homework!  If the last few years have taught us anything, a buyer should be very cautious and thoroughly understand every aspect of the mortgage they will be obligated to pay.

The absolute best course of action is to seek out a reputable lender and get pre-qualified before shopping for that first house. Most people tend to do the opposite – shop for a home and then try to find a mortgage after they have signed a contract, which can lead to financial pitfalls.

It is best to go house-shopping knowing exactly how much house you can really afford, so “shop the mortgage first, and the home second.”  Use the experience and expertise of your lender’s advice serve as a guide to what you can afford, so there will be no surprises.

Another thing to keep in mind while lender shopping – mortgage rates are very attractive right now. The waiting game, just as with house prices, may cost you if you wait too long. Buyers should consider the interest rate as part of the purchase. If mortgage rates were to rise, it would more than negate any further decrease in the home’s value – if that ever does happen. The combination is the key – current low home prices and today’s low interest rates.

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