Written by: Howell.Natasha
Your credit score is the capability you have for paying back credit or loans. If you have a high credit score, then it gives you a higher chance of getting loans, credit cards and mortgages. On the other hand, having low credit scores makes you a high-risk borrower. Typically your credit score is calculated from your borrowing activities, which include signing up for a credit card, borrowing a loan from a bank or when you buying a car. The rate and consistency at which you pay back your loans and credit then determine your credit score.
If you would like to buy a home and are considering either mortgaging, rent to buy or home lending, then your credit score is very important. Renting to own a home may mean that you choose to pay a stipulated amount of money to the home-owner each month or each quarter depending on your agreement. It works like a mortgage but in this instance, you are not necessarily dealing with an institution or bank. You could be dealing with an individual home-owner.
Home lending is taking a loan from a bank or financial institution to pay for a home you would like to purchase in full and pay the loan off according to the agreement made. Mortgage lending, on the other hand, is when an institution or bank gives one a loan with the existing property as collateral. If the borrower is unable to pay back the money within the stipulated amount of time, then their property is taken by the lending entity.
Your credit score should be at a minimum of 500 for you to consider buying a home. If you are at the minimum score, then you will have to consider putting up a high down payment, as high as 10% of the full asking price of the home you want, to jump-start your payments and give your lender confidence in you.
Your minimum credit score is also dependent on the kind of home loan you require. If you are going for a Federal Housing Administration, then you can have a credit score as low as 500 because these types of loans are government-backed. The loan is also limited to up to 450, 000 dollars only. This is a fixed loan and you will be required to pay Mortgage Insurance in case of a default.
If Your credit scores fall in the middle areas of the scale, probably between 580 and 620, then you have an average credit score. Your down payment, if at all expected on a home is likely to be 3.5% of the amount agreed on. You will likely get a fixed-rate loan, which requires you to pay a fixed amount with a fixed amount of interest over an agreed period. Likely 15 to 30 years. You earned a good home with these credit scores.
If you have a credit score of 620 and over, then you have a good credit score and will get a deal and a great home. You will probably not be required to give a down payment. You fall under the conventional loan category which is not government-insured and is sold to larger mortgage buyers. Your high credit score gives the lender confidence that you can pay back money given to you from your records.
Buying a home is an exciting experience. However, if you would like to buy your dream home, then you have to consider your credit scores. The higher the credit score, the better the home you can get. If you have low credit scores, then consider paying pending debts, paying your bills on time and keep balances low on your credit cards to improve your credit score and get a better chance at owning your dream home.
Visit our website at www.titanhomebuyers.com to get an offer today or call 843-804-6629.