Credit Score is Important to a First Time Homebuyer
Knowing your credit score is one of the easiest things you can do to help you buy your first home. Credit scores are used by lenders to decide if you are likely to repay money they loan you. Credit scores or FICO scores are assigned based on information in your credit report. Everyone is entitled to one free credit report form each of the three major credit reporting agencies each year. These agencies are Equifax, Experian and Trans Union.
Before you begin the Raleigh home buying process have your Realtor recommend a lender. Then, meet with the lender to establish your purchasing power by getting preapproved for a loan. As a part of this process, the lender will run your credit report and be able to discuss your credit score with you. The lender cannot give you a copy of the credit report, but you can order your free one at that time. By the way, Equifax is hard to deal with when you try to get a free credit report, so try the other two first.
Getting a report from at least one of these credit reporting agencies is recommended for every first time homebuyer. The mortgage company will use these reports and your credit score to decide if you are an acceptable risk for a mortgage. Some first time homebuyer loan programs have cut off scores and anyone below that score are not considered.
Any score over 680 is generally a good score for mortgage purposes.
It used to be that any score over 620 was considered good, but lenders are being more strict with their approvals. Scores less then that may still be eligible for a first time homebuyer loan, but may be considered “sub prime” and as such be charges a higher interest rate to offset the “risk” of a less then desirable credit history.
Knowing your score before you start can help you to avoid dissappointment when deciding to by a home. A low score can be raised with some time and corrective credit behaviours. So, even if you have a problem with your credit score, if you find out about it early, you can work to improve it.
Talking to an experienced North Carolina Realtor and a knowledgeable lender can help you develop a plan to increase your credit score if needed.
Get started now investigating your credit score if you want to buy a home in Raleigh before the December 1, 2009 deadline for the $8,000 incentive that is given to first time homebuyers.