Getting Ready to Buy Your First Home

One of the most exciting rites of passage in a person’s life is buying their first home. Eventually, most Americans tire of paying increasing rents for a property that is not their own, especially when everyone else is enjoying increasing equity as home prices rise. And they always rise.

That’s why there will never be a better time to buy than now. Being prepared for this purchase will save you money and give you a head start on building your own ownership equity.

Many first-time home buyers are confused about how lenders use their credit scores to price their home loans. Your credit score makes a difference and it can save you money if you get your credit in shape before you make an application for a home loan.

It’s not a requirement that your credit be perfect. A good lender can find you the mortgage that makes sense for you. But preparation is always a good thing. Here is how you can be prepared in terms of your credit score.

What is my credit score?

Each of the three national consumer credit reporting agencies assign you a score based on the credit history they have about you in their records. These scores range from 300 to 850, the higher the better. A lender will look at all three scores and generally base their underwriting decision on the top two, though this varies by lender.

The goal is to get the highest score you can. You can check your scores by going to the websites for Experian, TransUnion and Equifax. If you find incorrect information on your file, you will find help on the bureau’s website to help you correct it.

What score do I need for a loan?

Speaking generally, a score of 620 on two or three of your credit reports will qualify you for a mortgage, though government-insured loans often allow for lower scores. But there are a great many loan products available and it’s impossible to know what will best meet your needs until you sit down with a loan officer.

If you’re working with the right mortgage lender, your loan officer will explain exactly how your credit score impacts your loan choices and give you suggestions for getting the most home for your money and the best loan possible to finance it.

Some people will tell you that financing a home is just about numbers, but it’s not. It’s a rite of passage that, like any other transition in your life, will be easier with a good guide. There are many options available to you. Choosing wisely will make a big difference in your life.

If you’re tired of paying rent and you’re ready to begin building the kind of equity that will allow you to amass wealth, talk to an SRE Mortgage Alliance loan officer today.