How Much Does the Credit Score Impact Mortgage Approval?
Filed under: Real Estate
Are you preparing to buy a home for your family? It’s an exciting time to search for the home of your dreams! But, it is important to look at your financial health to ensure that you are approved for the financing that is needed to buy your dream home.
Most people don’t have enough money to pay cash for their property. So, they need to rely on mortgage financing to make the purchase. There are a few things that a lender will be looking for, which means that you need to do a little work before you can buy a home.
Credit Score Shows Financial Health
When you apply for a home mortgage, one of the first things that will happen is that the lender will run a credit check. This credit score is designed to give an overall view of your financial health, helping the lender to determine if you are a safe risk.
A good credit score is essential to increase the likelihood that you will be approved for the loan that you need. There are several factors that go into the calculation of your credit score:
- Payment History: Lenders want to see that you have a reputation of making on-time payments
- Credit Usage: How much credit do you have? If your current credit cards and other lines of credit are maxed out, then you will have a hard time getting a loan. Pay down these balances to improve your credit score.
- Account Age: It looks good to have credit cards and loans that you have owned for many years. Even if you aren’t using the credit cards, don’t make the mistake of shutting down your oldest cards before applying for a home loan
Improving Your Credit Score
Before you start the process to buy a home, you might consider the benefits of improving your credit score. Pay down the balances, get caught up on missed payments, and make sure that you are always paying your bills on time. These things might seem like small details, but they make a big difference to help you receive the financing that you need to buy a real estate property.
When you are ready to find the home of your dreams, talk with the real estate experts! Contact Lloyd Mize at Harvest Team Real Estate at: (951) 551-1677
