What Should My Credit Be?
A person's credit score represents how likely a person will pay off a loan and, therefore, how likely it is that the bank will give that person a loan. This is huge in the homebuying process! It determines whether or not you are a risk and if you will actually qualify to buy that house or if you will have to continue to rent.
In the credit world, you want a high credit score. The higher the number, the more certain it is that you will be able to pay off a loan. Mortgage loans are based on risk-based pricing. This means the lower the number, the higher the risk and therefore the higher your payment will be. When considering your credit, your payment history, what you owe, how long of a credit history you have, the types of credit you have and if you have any new credit is considered. Your payment history and amounts owed are the most critical when you are being considered for a loan.
When considering what is important when buying a home you should make sure you are applying for a mortgage that makes sense to you and that you have a credit around 600 or higher. If you are not at that number, consider paying off anything you owe, don't miss a payment and getting how many forms of credit you have to a manageable number. Once you get this under control, applying for a home loan will be much more in your favor.
How is Your PMI Affected by Credit?
If you put less than 20% down, you are required to pay a Private Mortgage Insurance. This is a security in case you default the loan. How good your credit is will affect how much that payment is. So, save money in the long run, by getting your credit score up!
How Does Credit Affect Interest?
Not only does a good credit score give you a better chance at getting a loan for a home, but it helps get you a better interest as well. Lucky for you, this means you can afford a bigger home! The perfect scenario to qualify for a loan is putting 20% down, having extra savings in case of an emergency and making at least three times your mortgage payment.
I am a real estate professional, serving Boulder and Denver, Colorado. My extensive knowledge of the market, coupled with my commitment to provide extraordinary service, has resulted in hundreds of successful transactions. Let me help you buy or sell your home.