You’ve found the home of your dreams… now what? One of the most important factors in securing a home loan is your credit score. Typically, a higher score increases your chance of being approved for a loan and securing a lower interest rate. When you apply for a home loan, lenders will pull your credit report and rely heavily on the information it provides.
Your report includes a record of borrowed money, your payment history, and how much open credit you have available. It highlights any bills referred to collection agencies, public record information attached to your name such as bankruptcy or tax liens, credit cards, student loans, auto loans, and other inquiries made about your credit. Lenders rely on this information to determine the likelihood that you can afford your mortgage and that you intend to repay your mortgage in a timely fashion.
Generally, the higher your credit score, the more lending options will be available to you – including lower interest rates. The average credit score is around 730; if your score is lower, you can still secure a loan, but your options will be limited and your interest rate will be higher. If your score is 600 or lower, we advise you to make a financial plan to prepare to secure a home loan. A good idea would be to invest 12-18 months repairing your credit before applying for a home loan. Rebuilding your credit will help you look more favorable to lenders in the future.
If you’re looking to secure a home loan, we have strong connections with top-notch mortgage lenders. Give The Lippincott Team a call today! 832-392-8818