Household debt is at an all-time high, so it’s no surprise that many inquiries about mortgage loans revolve around the minimum credit score one requires to take advantage of any given program. Yet the importance of having a good credit score while shopping for a house stretches beyond whether you can get approved for the loan in the first place. Your credit score drives other decisions, as well.
A High Credit Score Increases Options
The better your credit score, the more loan programs you can successfully apply to. You’ll have more freedom to choose loan terms that are a good fit for your needs and situation and more confidence as you head into the mortgage application process.
For example, you only need a credit score of 580+ to apply for an FHA Loan with The Doce Group, but with a 620 credit score, you could also apply for a conventional mortgage. With the HomeZero 100% financing program, you can get in with a score as low as 600. If it is 640+, you may be able to apply for a 0% down USDA loan if the property you seek to purchase is in a USDA-approved area of the country, or several other state down payment assistance programs.
If you want a much bigger house, you’ll need a jumbo loan, which typically requires a credit score of 680 or higher.
Your Credit Score Determines Your Mortgage Rate
Any score over 680 will help you obtain a favorable mortgage rate.
Lower rates can mean a lower monthly payment. They also mean paying far less over the life of the loan because you’ll be paying less in interest overall.
Even a tiny difference in your mortgage rate can make a massive difference to your finances.
See also: Understanding Mortgage Interest Rates.
How to Improve Your Credit Score Before Buying a Home
Start by checking all of your credit reports and scores so you know what’s impacting your score the most. Paying down debt to decrease your credit utilization ratio and paying bills on time every time are the two actions that will typically have the most impact.
If you know you want to buy a house soon, stop opening new accounts and stop making credit inquiries. These steps will also help you raise your credit score. Be patient and monitor your score over time. Depending on where you’re starting from, it can take 12 to 24 months to improve your score significantly enough to make a difference to your future mortgage prospects.
Get Help from the Doce Group Today
Wondering how your credit score stacks up and what options you qualify for? Alex can take a look at your total financial picture and help you decide whether it’s worth it to apply now or to do a little work on your credit score before you jump in.
Get expert advice from the Doce Group today! Click here to schedule a one-on-one consultation industry veteran Alex Doce.
