In order to get the best deals and rates on a home loan, you need to have a good credit score. Mortgage lenders are going to look to see if you are a responsible borrower and making your payments on time. Additionally, your credit score can provide the information a lender needs to determine your eligibility, including which rates they are going to offer and what type of loan you qualify for. Continue reading to understand how your credit score is important for the loan process!
Are You Credit Worthy?
Before you begin shopping for loans, have your credit score ready to go. Check online with an accredited website for the most accurate results. It’s important to mention that most lenders are going off of a FICO credit score, which ranges from 300-850. If your credit score falls under the category of “fair” or better, you’re in the average range for an American borrower.
Is Your Credit Enough for a Home Loan?
According to Meridian Banker, “the credit score needed to buy a house greatly depends on the type of home loan you apply for.” Some of the most common loans you are going to come across are conventional loans, FHA loans, and VA loans. These loans start at a minimum of 500-620 or higher. FHA loans are beneficial for borrowers with low credit scores, while conventional and VA loans are better if you’re in the “good” or “very good” range.
What about Rates?
The higher your credit score, the lower your rates are going to be. The amount you’re paying back on the loan is greatly affected by the rate at which it’s set. Essentially, a lower rate is going to save you more money over time. This is why having a good credit score can expand your loan options, while also giving you better rates in the long run.
For more information about the loan process and what it involves, the professionals at American Mortgage Resource, Inc. are here to answer your questions. We want you to be confident in your financial decisions, so call us at (617)-972-8588 or visit our website to send a message. We look forward to hearing from you!