So, you’re interested in buying a home? Besides having your financial documents and a down payment ready, you will need to make sure that your credit score is ready.
Most people buy their homes with a mortgage. There aren’t many people who buy their homes with cash because that can be a difficult task for most people to accomplish. Coming up with a large some of cash such as for a house can feel near impossible for some. And that is where getting a mortgage comes in.
A mortgage can help people reach their dreams. In order to get approved for a mortgage, 99.9% of the time you will need a good credit score.
Below are different ways your credit score can affect your housing search:
Your credit score can affect if you can buy a home.
This is probably the most important one. If your credit score isn’t high enough, then you might be rejected for a mortgage altogether. This is something that you definitely do not want if you are wanting a home. This would be a hard thing to change as well.
In order to get your credit score high enough, this could possibly take years. It all depends on where you are starting at.
Your credit score can affect your interest rate.
If your credit score is high enough for you to be approved for a home loan, then the next thing would be HOW high is it? If your credit score is good but not good enough, then you might have a high interest rate on your home loan.
You might have a 6% interest rate on your mortgage instead of a 4.25% interest rate, which can be hundreds of dollars of a difference on a home loan each month for your mortgage payment. Yes, something as simple as your credit score can affect whether or not you will be paying extra money towards your mortgage payment each month or not.
Your credit score can affect when you buy.
As a mixture of the two above, your credit score can affect when you buy as well. If your credit score isn’t high enough to get approved or to get the interest rate that you want, then you might put off your home buying process until you can get to a point to where you are happy with buying a home.
Did your credit score affect your housing search? In what ways?
Image via Flickr by Karol M