The Credit Score You Need to Buy A Home

Currently interest rates are low and it just might be the perfect time to start looking for your new home. Before you go house hunting there’s some important things to consider. It depends on what kind of home loan you’re trying to obtain, but one thing is for sure– if you’d like to get the best interest rate and save thousands of dollars over the lifetime of your loan you must have good credit. PowerHouse Consultants can help you reach your highest credit potential. Contact us today.

We will briefly go over the types of loans that are available out there and the requirements all vary. Here are a few things that you should consider before applying for a loan and the things lenders will be weighing.

• Credit Score – This will be a major determinate of your interest rate. Just half a percentage point can make a big difference.
• Down Payment Amount – What percentage can you put down?
• Amount of Debt – The amount of debt you currently carry.
• Income – Proof that you make enough to pay your mortgage payment
• Collections – These and others can be removed from your credit report and your life.
• Savings – They’d like that you be able to cover at least 2 months of mortgage payments
• Employment History – The longer the work history the better.

Conventional

These mortgage loans aren’t insured by the government, but follow the standards set by Fannie Mae & Freddie Mac. They usually require a credit score of 620 and above but can vary by lender. They are the best option for those with high credit scores because they offer the most competitive rates as well as flexible payment periods (15 & 30 years). If your credit score is stellar (700+) you’ll usually be able to qualify for one of these loans. Not yet apart of the 700 club? Call to see how we can help.

FHA Loans

These mortgage loans are insured by the government making them less risky to lenders, although they do have some requirements such as being a first time home buyer. They also require at least one credit score or if they obtain all three of your credit scores they will use the middle one. The minimum score is usually 500 (10% down), but to put less money down it’s 580 (3.5% down).

VA Loans

These are designated for those that have a military service record including veterans, service members and  and possibly their spouses. These don’t require a down payment, but they usually prefer that you have a credit rating of 620 or above. Don’t know what your credit score is? Find out how here.

USDA Loan

These loans are insured by the U.S. Department of Agriculture. These apply usually to homes in rural areas and much like the VA loans require zero down payment. Lenders usually expect you to have a credit score of 640+ along with other income requirements.

No matter what kind of home loan you’re getting you need your credit to be at its best to get the best rate. PowerHouse Consultants has built our reputation on getting results for our clients. Contact us today.