Before you buy a home and get a mortgage, there are ways to ensure you get a better deal from a lender. The difference can save you many thousands of dollars throughout your mortgage. Taking time to raise your credit score beforehand can enable you to get the better terms you want.
The Savings Potential of a Good Credit Score
A good credit score can help you get a larger home loan, smaller payments, and lower interest rates. How much you save will be determined by several factors, but it is possible to save more than $100,000 on a 30-year fixed-rate mortgage just by having a better credit score.People with a credit score over 760 can probably expect to get the best deals on a home mortgage. If your credit score drops during the approval process, you can expect it to hurt the deal you get. Lenders gladly work with people with a proven track record of handling their finances well by consistently making payments on time and keeping their debt-to-credit ratio at 30 percent or less.
Credit Scores and Loan Types
Different types of home loans can have varying requirements for a credit score. Bankrate provides a general idea of what kind of credit score you need to get some home loans from various lenders:- Most lenders want to see a score of 620 minimum.
- FHA loans require a minimum of 500 with a 10 percent down payment or 580 with a 3.5 percent down payment.
- USDA loans require a minimum of 640.
- VA loans have no minimum, but prefer about 620.
- Jumbo loans require a minimum of 700.
