Knowing your credit score is just one of the many important things you have to check first before you purchase a new home. After all, you will be paying your mortgage every single month for several years, so obtaining the best mortgage rates could do your financial health a lot of good.
It goes without saying that the importance of a good FICO score in getting a mortgage is tremendous given that it allows you to qualify for a home loan and avail of the best rates available. Every lender uses its own formula, so there is actually no actual figure that anybody can point to that will qualify for the best mortgage rates.
One thing is certain and that is lower credit score means higher mortgage rate or your application for mortgage will not be approved altogether. Mortgage lenders are even more stringent with their requirements now than they have been in the years prior to the housing crisis that started in 2008.
In fact, FHA loans now have a minimum credit score requirement of 500 considering it does not even have one in the past. Surely, a 500 FICO score is way too low and most banks will actually require higher than minimum credit score like 600 to approve an applicant for FHA financing.
Consumers with higher credit rating may benefit from discounted interest rates or less documentation requirements. One may get approved for a loan with a score of 620, but you usually need at least 720 to avail of the lowest rates and least amount of required documentation. With a score of 720, you not open your door to more opportunities of getting the lowest mortgage rates, but also to more lenders and favorable payment terms.
For applicants whose primary goal to get approved for a more affordable loan, the goal is to have a FICO score along the top 40 to 50 percent range. This means that your score will be “good enough” to avail of the lowest mortgage rates. Often, lenders will not distinguish between people whose score is 720 and those who have 820. Meanwhile, those who have a score of below 620 are considered sub-prime and they receive a sub-prime mortgage rate.
It makes a lot of difference in terms of the amount of interest you pay in the long term if you are not able to obtain the best rates for your housing loan. It is just like throwing away money out of the window.
[B]uying a new home is a completely foreign process for most first-time home buyers. Most people know that a down payment is required in most circumstances. However, those who are new to the process may be unfamiliar with the concept of closing costs. The fact that you need a fairly significant amount of cash to […]
[A] multi-account card does exactly what it sounds like it does. It allows you to keep information from multiple cards on a solitary device. It functions exactly like a regular credit card. If you don’t have a multi-account card you may want to reconsider the benefits. These multi-account cards offer convenience and security all rolled […]
[P]ickpocketing is one of the oldest crimes in the book. For centuries, thieves have been taking advantage of crowded places to get their hands on other people’s hard earned money. A new form of the deception has evolved for the current age. Electronic pickpocketing is now possible due to several advances in technology. Learn more […]
[Y]our credit score is likely one of the most important numbers in your life. It will follow you around when you try to land a job, purchase a new home, or qualify for a loan. If your score has taken a turn for a worse, it doesn’t have to stay that way forever. You can […]
[T]he way you use your credit can have a major impact on your lifestyle, for better, or for worse. Achieving an excellent credit score may seem like an impossible goal. However, even a few small changes can really make a difference. The following habits can transform your credit and your life. Be On Time Making […]
Running a business requires an ability to juggle a wide range of tasks, often all at the same time. One such task involves keeping your credit profile in good condition. Maintaining your business credit is one of the important things an owner must handle. Learn more about how to keep your business credit on track. […]
[D]eciding on how to pay college tuition for your child means making some tough choices. For parents with financial troubles or bad credit, the decision are made even more difficult. Many people in this situation worry that there are no options available. Find out how you can help pay for college even when faced with […]