How to Buy a Home

If I want to buy a home, how high of a credit score do I need?

Everyone is speaking about the American economy these days: What’s gone wrong, who’s to blame and how to fix it?

Basically, it comes down to irresponsible, greedy people who gave too much trust to unqualified loan applicants in order to make some fast money. As a result of this fiasco, there’s a lot less trust to go around when you go looking for a mortgage.

Back in the days when lenders were busy making this horrible economic crisis, your credit score, if around a particular mark (620-650 by most estimates) ensured you both qualified for and received decent interest rates on the money you were lent.

Times were simple. Approval was quick and easy. Loan officers weren’t probing so carefully or too deeply in to your financial background. So long as you could provide that minimum credit score, your next move was to choose the new carpets.

I remind you of this to show how things have changed for you, the Prospective Homeowner. The minimum credit score of 620-650 is no longer the key to home ownership like it was in the past.

While scores in these ranges may still constitute an approval, it is usually a less desirable one, costing you more money at closing, in fees and over the long term of the loan in interest rates. To be excused from these excessive options, your credit score will need to be in the 720-750 range.

As I mentioned, lenders increased these problems by extending too much trust. Trust is still obtainable, but only after great judgment of a variety of financial information on your loan application.

If you hope is to be approved for a mortgage with reasonable terms, you may want to examine your credit report and clean it up a bit. Often credit reports contain errors or items which can be deleted, with a little work.

By having a nice sized deposit you show your commitment to own a home. Finally, creditors will review your debt to income ratio. You can improve this by paying more on your debts, earning more money, or ideally both.

In conclusion, it is crucial to realize that having a certain credit score is not the only thing youll need for getting a home. Times are lean, trust is little and judgment is high. You can enhance all the factors involved with a bit of time, understanding and effort. Home ownership is a very justified goal and we wish you the best in your pursuits.