Consumers must monitor their credit scores like a helicopter mom and make sure that they keep higher than average scores when possible. The credit scores don’t just affect their ability to buy a home, but the scores can increase costs related buying or owning a home. Reviewing how your credit scores affect your ability to get financed gives you better insight into why they are so important.
All Mortgages Have Minimum Credit Score Qualifications
All mortgages have minimum credit score qualifications. Even a USDA loan requires a minimum credit score of around 530, and this is typically the lowest acceptable credit score. For mortgages such as FHA options, the credit score must be around 580 to 620. Conventional loans require a credit score of at least 620. The consumer’s credit scores could prevent them from getting any mortgage if the scores are too low or if they haven’t established any credit yet.
The Credit Scores Affect How Much You Can Borrow
The credit scores just like their income can affect how much a lender is willing to provide through a mortgage. If the credit scores are excessively low, lenders will want a much high down payment. For primary homes, the minimum down payment for a consumer with poor credit is at least 10% of the total mortgage amount. Some buyers don’t have that much money saved for a down payment. This could present some difficulties when applying for a mortgage to buy a home. Consumers can review the effects of their credit score on their finances if they check out his Twitter page now.
The Premiums You Pay for Insurance are based on Your Credit
When purchasing homeowner’s or even auto insurance coverage, the insurer will review the consumer’s credit scores and determine if the consumer has a lot of negative listings on their credit. If the consumer has lower than average credit score, the insurer will charge higher than average premiums to offset the risk of insuring the customer. Consumers can improve their credit scores and pay lower premiums on their homeowner’s insurance when buying a home.
Credit Scores Affect Your Ability to Use Your Equity
After the homeowner has accumulated at least 20% equity in their home, they can borrow some of their equity to complete home improvements or even settle some of their debts. When applying for a home equity line of credit or home equity loan, the homeowner must have qualifying credit scores. If they don’t qualify, the homeowner cannot access their equity.
A second mortgage is another options that allows the consumer to borrow against their existing mortgage and use their home as collateral. If they don’t have the right credit scores, their lender even if they have worked with the lender for years cannot provide them with a second mortgage.
Consumers must have minimum credit scores when buying a home with a mortgage. The lender will review their credit scores to determine what mortgages are available. The credit scores affect their interest rate and how much they can borrow. Consumers can review their credit scores by contacting a lender right now.