Many prospective home buyers start their home search by hiring a Fargo Realtor and taking tours of their target neighborhoods. They don’t have any idea about their budget and more importantly their financial obligations. Which can prove to be a big mistake. You will wind up wasting a lot of money and time if you don’t know how much you can afford. Most buyers take out a mortgage to finance their home purchase. If you too are going to apply for a home loan, the first thing you should do is to check your credit score.
Your credit score is what lenders will evaluate before approving your mortgage application. Your credit score will determine the interest rate, the amount of insurance premium and most importantly, the amount of loan you will get. These details will help you determine your budget.
How to check your credit score?
You can get your credit report from any of the three national credit reporting agencies free of cost once in every 12 months. These agencies are Equifax, Experian and TransUnion. All you have to do is fill out a form online on annualcreditreport.com to request a credit report. It is recommended that you get free copies of the credit reports from all three agencies.
What is considered a good credit score to buy a house?
In order to get the best mortgage rates, your credit score should be at least 720 or above. The average credit score that conventional lenders require is nearly 680. You can get an FHA-backed loan for a credit score less than 680.
What if your credit score is not good enough?
We highly recommend that you build your credit score before applying for a mortgage. The lenders will provide their best interest rate and mortgage terms if your credit score is excellent.
Make sure that you stay current with your monthly payments for credit card, utility bills, auto loan or any other type of loan that you currently have. If you have missed loan payments showing up on your credit report, your credit score will drop, making it difficult for you to get the best mortgage deal.
If you have a foreclosure or bankruptcy on your credit report, lenders may not approve your mortgage application. Foreclosures and bankruptcies stay on credit reports for at least seven years.
If you find that your credit score is not good enough despite the fact that you have never missed loan payments, you should try to find out if they are any discrepancies in the report. Believe it or not, it happens all the time. If you find one, you should dispute it with the concerned credit reporting agency and get it corrected.
Buying a home is going to be one of the biggest financial decisions in your life. For this reason, you should be financially prepared before taking the plunge into the housing market in Fargo. You should ensure that you have arranged for the required down payment and have a good credit score.