How Does Your Credit Affect Your Home Loan?
Summary: Credit scores impact mortgage interest rates available to a potential borrower. Borrowers who qualify for a lower interest rate due to their credit score can save hundreds on their monthly payments and thousands throughout the life of the loan. What is considered a ‘good’ credit score when applying for a mortgage? The answer varies as different loan types have different credit score requirements.
A credit score is a three-digit number that determines the financial standing of a buyer. Credit scores are a key indicator of the likelihood of a borrower paying back debts on time. Mortgage lenders and refinance lenders reference a borrower’s payment history to determine the likelihood of the home loan being paid. The higher the credit score, the more confident mortgage lenders and refinance lenders are in offering the housing loan.
What is a ‘good’ credit score when applying for a mortgage? A question asked by many borrowers, but the answer varies. Different loan types have different credit score requirements. Conventional loans have a minimum credit score of 620, while FHA loans have a minimum credit score of 580. Loan requirements are flexible amongst different mortgage lenders—to understand your mortgage options and qualifying credit score contact your mortgage lender.
Higher credit scores may offer borrowers better interest rates and loan terms. Borrowers who qualify for a lower interest rate due to their credit score can save hundreds on their monthly payments and thousands throughout the life of the loan. Interest rates are dependent on the housing market. Make sure to contact your lender to know your options.
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