At Haring Realty, our REALTORS® know that some aspects of the home-buying process can be confusing.
Even buyers who have been through it all before don't know everything. And it can be even more worrisome for first-time buyers, who wonder about all the things they aren't familiar with yet. That can put a damper on the fun of looking at Mansfield or Ashland homes for sale.
One subject comes up again and again: Financing. Where to find a mortgage and how to get the best deal.
Choosing the best mortgage for you can save you thousands of dollars across the life of your mortgage. But buyers often go into the process knowing little about one of the most important factors that can influence your mortgage terms: your FICO score.
Every time you pay a bill or use credit, your transactions are cataloged by three credit reporting companies: TransUnion, Experian, and Equifax. They gather financial information behind the scenes used in calculating FICO scores.
The FICO score, in turn, is a three-digit number from 300-850. It estimates how much risk you represent to a prospective lender, ranking how likely you are to pay back your loans based on a weighted assessment of financial behavior. Total credit available and bills paid on time are especially vital.
In general, "good" FICO credit scores range between 670 and 739.
But the story gets a little more complicated when you look at what credit score is needed for a mortgage.
Many mortgage programs come with their own minimum credit score requirements:
Conventional Fannie Mae / Freddie Mac Home Loan: 620
Federal Housing Administration (FHA) Loan: 580
Veterans Affairs (VA) Loan: 620, but can vary by lender
USDA Rural Housing Loan: 640
Jumbo Loan: 680
One thing stands out right away: You don't need perfect credit for a home loan!
That said, it's always best to improve your credit score as much as possible before you buy a home. A higher score means more favorable interest rates, leading to savings. Plus, you might be exempt from pricey mortgage insurance and hefty down payments common with low credit score applicants.
To raise your credit score, adopt these sound financial habits:
Contact us today to learn more about buying a home.