When applying for a mortgage, a high credit score is likely to qualify you for the best home loan offers. As such, it is perfectly natural to be focused on your credit score as you shop for a home. But you could have incorrect assumptions about credit scores and mortgages. Here are a few common myths debunked.
1.You need perfect credit to buy a home.
Many homebuyers believe that they can only afford to purchase a home if they have excellent credit. But quite a few first-time homebuyers and repeat homebuyers alike are not in this situation.
You may be surprised by what you can qualify for even if your credit score is not the best. Lenders also look at your debt-to-income ratio, savings, employment, and other factors.
You also can avail yourself of a government-insured loan program such as those available through the FHA and USDA. Because there is government money backing these programs, a lower credit score is not as deleterious to a homebuyer’s application.
2. All lenders check the same credit score.
Another common assumption among borrowers is that all lenders look at the same exact credit score. Indeed, you may not even realize that you have more than one credit score.
There are 16 types of FICO scores alone, and there are also other credit scores which lenders can look at. That means that your borrower profile could be better or worse than you believe, depending on which score a lender decides to pull up.
3. Applying for multiple loan opportunities will damage your score.
Homebuyers sometimes resist sending out multiple applications for home loan simultaneously out of fear that each one will result in damage to their credit scores.
It is true that you can expect hard credit score checks when applying for home loans, but it is expected that you will be shopping around. As such, these checks can be processed as a batch, resulting in only a single dent to your score, not a cumulative set of dents.
4. You cannot raise your credit score in time to make a difference.
If you need to purchase a home soon, you might assume that there is nothing you can do to increase your credit score rapidly enough to make a difference in the loan offers you receive.
But there are a number of steps which can result in quick boosts to your credit score. It is worth checking into the possibilities before you dismiss the idea altogether.
First Residential Mortgage Can Help Qualify You for a Competitive Loan in Virginia
Whatever your financial situation may be, First Residential Mortgage works with customers with a range of credit scores. Along with providing you with valuable guidance on improving or maintaining your score, we can also match you with FHA and USDA loans and other products which are ideal given your credit situation. To get started, please call (540) 838-5868 to schedule your home loan consultation.