Credit Scores - Fort Wayne, IN Mortgages
Credit Scores - Fort Wayne, IN Mortgages
What’s your credit score?
This is the first question you should be prepared to answer when applying for a mortgage or really any big purchase. When was the last time you checked your score? If you can’t answer this simple question it’s time to check. TransUnion, Equifax, Experian, and myFICO are the best ways to find out what their reporting about your credit history.
If you are shopping for a mortgage or refinancing the equity in your home, your credit rating maybe the single most important factor to saving money by getting a lower interest rate.
In some cases reports with a 100-point difference in your FICO score might save you over $40,000 extra in interest payments over the life of a 30-year mortgage on a $300,000 home loan. In fact, your FICO credit score impacts many areas of your life, but most significantly your mortgage rate terms.
When checking your credit score note that you are entitled to get one free credit report from all three major credit reporting agencies. Remember, because information differs on each of your credit reports, your FICO score might vary with each report.
When reviewing your Experian credit report inspect it carefully for inaccurate records. If the information on all three credit reports is the same, and no major errors exist, chances are your Experian FICO score is about the same as the others.
You may also add notes to your credit report concerning negative items. You can list reasons for non-payment or explanations of negative items if you cannot get them removed. If you notice errors on your credit report days before your mortgage is approved, your mortgage broker can help you file what is known as a Rapid re-score to help you get the mortgage at the lowest interest rate possible.
Over 90% of the time when you apply for a mortgage loan is critical to lenders decision to qualify or deny your application. The FICO score ranges from 300 to 850 with most scores falling between 650 and 799. The lower the score, the higher the credit risk, and a borrower’s interest rates will be affected. Knowing your score before applying for a loan allows you to have a better idea of where you stand in regard to gaining a mortgage and whether you’ll be able to afford the monthly payments at the interest rate you can get.
A good credit score is not the only factor in getting a mortgage. Lenders also look at:
- Your employment history (should be at least two years with the same company, or in the same industry with a solid work history and no previous employment gaps)
- Your total income
- Down payment funds available (and where they came from)
- Your recent bank statements, usually the past three months
Don’t panic if your FICO is not so great, getting approved for a mortgage is still possible even if you have less-than-perfect credit. In today’s economic climate of tighter lending requirements, some lenders may approve you for a mortgage if you choose a home more based on income and credit ability i.e. lower cost home. The lender may also require a large down payment initially and require a solid work history.
Applying for a mortgage is often frustrating, and a cumbersome process. Make sure you know your credit score and that it reports accurate information.
