If you are looking to purchase a home in the near future, you will want to pull your credit report first to see if there are any errors that need to be fixed before even applying for a loan. Why is this important? Obtaining a home mortgage loan isn't as easy as it used to be. Mortgage companies are tightening their belts and require a higher credit score now to get the better rates. The higher your FICO score, the better your interest rate will be. The better interest rate you have, the lower your monthly mortgage payment will be.
What is a FICO score? This is the Fair Isaac & Co. (FICO) credit score assigned to a creditor that determines the likelihood that they will pay a debt back. These numbers vary from 300 (extremely high risk) to 850 (excellent credit). Less than one-half of one percent of the population in the United States have a perfect 850 FICO score. Mortgage lenders use the FICO-based system to decide whether they will approve a borrower and at what percentage rate.
Currently, credit scores are rated as follows:
Excellent - Over 750
Very Good - 720 to 750
Acceptable - 660 to 720
Uncertain - 620 to 660
Risky - Less than 620
There are three credit reporting agencies that compile your credit information and determine your FICO scores: Experian, Equifax and TransUnion. They tabulate your payment history, length of credit history, types of credit accounts you have, the balances on your credit accounts and loans and their ratio to available credit as well as recent credit inquiries to create your FICO score. FICO scores can vary from agency to agency. So, you should pull your free annual credit report from each one to see if there are any errors that have been made and need to be fixed BEFORE you apply for a loan.
According to CNN Money, a homeowner who buys a $300,000 home on a 30-year fixed rate mortgage can save $14,200 in interest payments over the life of the loan from people the next tier down. They can save $25,600 in interest payments over those people grouped two tiers down. That's why it's important to make sure your credit is as sound as possible before you apply for a loan.
Keller Williams Realty Northeast is one of the fastest-growing real estate companies in America for good reason. It is our people and culture that set us apart from other real estate firms. We want to help you find the best Kingwood home for you. To learn more about Keller Williams Realty Northeast, please visit our website at http://www.clickkwne.com. We'd love to help you with your Kingwood real estate needs.
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