You’re tired of paying rent and are ready to buy your first home… You might be ready, but is your credit?
Before you start looking through the real estate listings or go to all of the open houses you can find, you need to make sure that you can actually qualify for a home loan.
The first thing you should do, before all else, is obtain your credit report and credit score. It’s important that you look at all three of your credit scores because that is what a lender is going to do.
Once you get your credit report, and scores, look over your report to see if there are any mistakes… late payments that are showing (that you know where not late), accounts that are not yours, or any other errors that are reporting.
If you find errors on your credit reports, you can dispute the information with the credit reporting agencies.
So everything look okay on your credit report, you have your credit scores, now what? Is your score good enough to get a loan?
What score is needed to get a home loan? Will a high score get me a better rate? …all good questions, let’s take a look.
If your score is higher than 660, there’s a good chance that you will be able to get a mortgage… that assumes you are able to meet the lender’s requirements for the ability to repay the loan based on your income and debt.
That’s not to say if your score is under 660 you will not be able to qualify for a home loan, as a matter of fact, the FHA (The Federal Housing Administration) guidelines allow a score as low as 580. But not all lenders that do FHA loans will go that low.
It is true, that typically with a better credit score, comes a better interest rate. With a score of say 760-850, you will be offered the lowest rates available. Conversely, with a score of 580-620, the rate you can expect to receive is going to be much higher.
If you are considering buying a home but your credit score is lower than the number of people that will fit in a school bus, or you would like to find out about becoming debt free, call Debthelper at 800-920-2262, or visit @ www.debthelper.com.