The true cost of buying a home is not only related to the purchase price. In addition, you also need to factor in the many years of interest that you will be paying on your mortgage as well. Therefore, it is important to try and obtain as low of a mortgage interest rate as possible. Of course, for starters, you need to be sure that you have enough credit built to even qualify for a home loan. As a rule of thumb, a majority of lenders will not give you a loan when your credit score is below 620. On some occasions you may be able to get a traditional FHA loan or FHA 203 k with a credit score less than 620.
What is considered a good credit score?
Generally speaking, most lenders will look at borrowers more favorably when their credit score is above 670 or so. A credit score above 740 is considered to be very good, while a score of 800 or more is exceptional. To check your credit score, you can go to each of the three major credit bureaus. These credit bureaus are: Experian, Equifax, and Transunion & they will each provide you a free credit report.
Tips to improve your credit score
- Avoid late payments: Perhaps the most basic of all tips to improve your credit score is to pay your bills before they are due.
- Monitor your credit score & repair any errors: When saving for a home purchase, it is critical to monitor your credit score to identify credit discrepancies.
- Keep your credit utilization low: The percentage of your total available credit that you use is also an important factor to consider. As a rule of thumb, a credit utilization below 30% of your total credit line is important to maintain a good credit score.
For more information on how to improve your credit score click here.
In closing, your credit score is critical factor in not only being able to qualify for a home loan but also obtaining a lower interest rate. To improve your credit score quickly, you should focus on reducing your debt, limiting your spending, and paying bills on time.
Are you thinking about buying a home in South Florida? We can help. Contact one of our friendly team members at Live South Florida Realty, Inc. today! In addition, don’t forget to download the free Florida Home Search app as well.