3 Things to Know About Your Credit Score
You’ve probably heard that your credit score will have an impact on how easy it is to buy a house. While you might know that you need a certain credit score, you might not know much more. Understanding the impact of your credit score will help you determine where you need to get it and when you’re ready to buy a home. Here are some things that you should know about how your credit score affects buying homes for sale in Lakewood Ranch.
How Your Credit Score Affects the Mortgage Rate
Most people know that your credit score will affect whether or not you can receive a loan for a home but it also affects the mortgage rate. Lenders want to be assured that you’ll pay back what has been loaned to you. While you can still receive a mortgage with a lower credit score, it might cause you to pay more on your mortgage rate. Typically, lenders will include risk-based pricing when a person has a credit score that’s considered below average. The average credit score is usually between 650 and 699. If you’re below 650, it will probably start to impact your mortgage rate.
What Should Your Credit Score Be?
There isn’t a certain credit score that will allow you to qualify for a loan or for a certain rate. It depends on the lender you’re using. In most cases, a credit score of 660 will ensure that you’ll qualify for a loan. Anything lower than that might put you at risk of higher interest rates and poor loan terms. If you’re looking to qualify for an FHA loan, you can do so with a lower credit score of 580. Some people prefer to wait on buying a home until they can receive the best rates possible. If this is your plan, you’ll want to raise your credit score to around 740 before applying. This will result in paying the least amount on your interest rates.
What’s the Minimum Credit Score?
If you have a low credit score, it’s recommended that you raise it before receiving a loan. This will help you to receive lower interest rates and better loan terms. However, if you don’t want to wait, you’ll need a credit score of at least 500. Without this minimum credit score, you’ll usually need someone with a better credit score to cosign for you. This could be a parent, spouse, or someone else that’s close to you. It’s important to note that this might be difficult as you’ll be putting their credit score in jeopardy if you can’t make your payments on time.
One of the most important factors when receiving a loan for a new home is your credit score. While most people know that you need a quality credit score, they might not know what that is or what to do if they have a poor credit score. These are some of the things that you should know about your credit score when looking for homes for sale in Lakewood Ranch.