Duringthe application process to buy a home, the buyer’s credit score isone of the most important criteria that is factored into the process.Some people find themselves in despair, especially after the GreatRecession, that these 3 digits can sometimes be a large decidingfactor in acquiring a home loan. Seller-based financing and a fewother options may not require as good of a credit score, but theconventional routes to home-ownership will. This score is not justfor acquiring a mortgage, it paints an overall financial picture ofyou as a buyer.
Thenumber between 300 and 850 is commonly referred to as a FICO score,that lenders use as a prime factor in deciding whether or not acustomer will have the ability to pay back a loan. The higher thenumber, the better bet the person is “on paper”. The formula usedto calculate this is a mixture of payment history, amounts owed, howlong the person has had credit, and if they have recently opened anynew credit accounts. Your payment history and amounts owed togethermake up over 60% of what is gleaned for your score. All of theinformation that the bureaus use to compose your credit score isfound on your credit report, which reports from 3 major bureaus. Eventhough there are nearly always inaccuracies between the 3 reportingagencies, this is still the standard for what churns out that 3 digitnumber that governs quite a bit of your future in purchasing.
Generallyspeaking, under 660 is a credit score that will not have a lender seeyou as a favorable bet. When the housing meltdown occurred, this riskgroup was what defined the term “subprime mortgage”, and someborrowers had scores as low as 600. What is seen as a very poorcredit score is between 500 and 580, and you will probably have avery hard time finding a loan at all. Between 580 and 620 is stillconsidered poor, and if you can secure a mortgage, may be looking atan interest rate up to 3-4% higher than the normal standard. In thecredit score range that is from 660-699, you are for the most part inthe clear, and may have some lenders tacking on just an extra .5% toyour fee.
Withinthe 700-760 credit score range, your score has a very minimal impacton your interest rate, and you should not have many problems. The“excellent” category of credit rating is 760-850, and this iswhen it can be fairly easy to secure a mortgage with among the lowestinterest rates possible. The FHA loan is still one of the most commonfor first-time home-buyers, and the credit score is very important:With a 580 credit score or above, they buyer will generally have adown payment of around 3.5%, and if it’s lower, that amount jumpsdrastically to 10%.
Righthere in Virginia, you can search Chesterfield Homes For Sale Under200k, after you get your loan squared away and are ready to look atsome dynamite properties. There are also plenty of credit counselorsout there who can help you with getting all of your payments down,only into one payment, and even removing some negative items fromyour score that have been there for awhile. Don’t despair, andrealize that your dream home is literally waiting right around thecorner if you are beginning to repair that all-controlling 3 digitnumber!