How Your Credit Score Will Impact Your Home Search

How Your Credit Score Will Impact Your Home Search
  • Opening Intro -

    The decision to purchase a home is an important one that requires careful management of financial resources and research into a variety of different aspect of property ownership.

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You may be buying your first home and feel overwhelmed by the technical language of the real estate industry. Or you may be considering a larger home for your family’s needs and are unsure how much you can afford. Maybe you are thinking about investment property to provide income.

Regardless of the circumstance, financing your purchase will involve your credit score as a measure of your ability to repay the loan amount.

Getting a Mortgage in Today’s Lending Climate

The mortgage crisis of a few years ago created a more difficult climate for acquiring a home loan. Many people purchased homes without having sufficient income to repay the mortgage. In addition, widespread layoffs caused by the economic crisis put many homes into foreclosure, leaving the banks holding the financial bag for these mortgages.

Even today, lenders tend to be conservative about lending money for housing. They require considerable documentation on employment and debt load. Your credit score is the most significant measure banks will use to determine your ability to repay a home loan.

How to Get the Best Interest Rate

If you have a credit score above 740, you will be eligible for the best mortgage rates. A credit score below 620 makes it very difficult to find a financial institution that will provide a mortgage at all, and that mortgage is likely to be at a higher rate that increases your mortgage payments. For this reason, you should examine your credit record carefully to ensure that it is up to date and contains no past credit problems that have been resolved.

You can find a number of resources to help you repair your credit score. You can learn how to dispute incorrect marks on your record, address any outstanding debts, and find professionals who can advise your path back to a solid credit score and a lower rate on any home purchase.

The House You Can Afford

Even a 1-point difference in the interest rate can increase your monthly payment appreciably. A higher interest rate can result in your having to look at less expensive properties that may not suit your family’s needs, either currently or in the future. The Home Town Team at RE/MAX Integrity and similar real estate companies can help give you a better idea of what home to expect with your current credit score.

Smart homebuyers understand that their credit record can have a significant impact on their ability to purchase a home that will fit their needs in the future. They prepare in advance for their purchase by paying off old loans, tightening their belts to prevent adding more debt and checking their credit record for inaccuracies that must be corrected.

Consumer Financing reference:

getting qualified for home purchase loans

 
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Last update on 2017-10-20 / Affiliate links / Images from Amazon Product Advertising API

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