The Mortgage Application & Credit Score
Mortgage lenders review an applicant's credit score as part of the loan origination process, and this will apply to any mortgage in the Western Mass. area as well as elsewhere. If you have good credit, you'll more easily qualify for a mortgage loan with a better interest rate. If you have bad credit, you have some work ahead of you before lenders will consider you for a great home loan.
If you don't know your credit situation,before beginning the mortgage application process, take the time to learn more about where you rate on the credit spectrum.
Begin by requesting your credit reports from the three companies that maintain credit ratings: Equifax, Experian and TransUnion. Visit www.AnnualCreditReport.com, a site maintained by all three agencies, to request all three reports at once.
Review your credit reports for errors that may be lowering your credit score. Check the names, addresses and creditors closely. If you find an error, report it to the agency for correction.
When you order your credit reports, you should know in advance that they won't come with a credit score. You have make a separate request for this number through a website like www.MyFICO.com.
Once you know your score, figure out where you fall on the credit scale. Credit scores range from 300 - 850, with 300 being the worst and 850 the best. The average credit score in Western Mass. as in the rest of the United States is around 720. If your score is above 720, you should have no problem applying for and receiving a low interest mortgage loan from a Western Mass. lender.
However, if your score is between 650 and 720, you may want to work to increase your rating, since the higher your credit score, the more likely you'll receive a lower interest rate (and lower payments) on your Northampton-area home loan.
If your score is below 600, you need to get going on improving your credit score so you won't be barred from buying the new home of your dreams. Start by following these three simple steps.
1. Avoid applying for too many loans. This signals lenders that you can't properly manage your finances.
2. Pay down your debt. Work to get your debt-to-income ratio to less than 20% of your net monthly income.
3. Make all payments on time. This will raise your credit score the same way a history of late payments decreases your score.
It takes time to change credit scoring, but don't give up! With hard work and patience, you'll be eligible for great mortgages!
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